|
Payday Loans are extremely expensive
loans
Borrowers could end up paying very high
fees - up to 456% Annual Percentage Rate
(APR), the yearly interest rate.
|
Payday Loan |
Credit Card Advance |
|
You write a check for $117.50 |
You charge $100 on your card |
|
You get a $100 payday loan |
You get a $100 card cash advance |
|
In 2 weeks the lender cashes
your check. |
In one month you get your bill. |
|
After first cycle Interest Paid:
$17.50 |
After first cycle Interest Paid:
$1.75 |
|
APR: 456% |
APR: 25% |
Overwhelmed by Debt?
Some borrowers may not have enough funds
in their account for the check to clear
in two weeks. So, they go back to the
lender and take out the same loan again.
Borrowers must pay another $17.50. Some
borrowers find it difficult to pay off
the loan, so they keep using the service
repeatedly, paying $17.50 over and over
again, without paying down the original
balance. That means a borrower will have
paid $35.00 in fees over the course of a
month and still owe $117.50!
Know your rights
The Payday lender must:
•
disclose in writing the Annual
Percentage Rate it is charging.
The payday lender cannot:
•
charge interest of more than 15% of the
check written,
•
lend you more than $300,
•
charge more than $15 for a bounced
check,
•
send you to jail for a bounced check.
They cannot even threaten to send you to
jail.
Alternatives to a payday loan
• Contact your creditor
to see if they will give you more time
or accept a partial payment. Remember to
ask if there is a late fee
• Charge the expense to a credit card
or get a cash advance on your credit
card. They have much lower interest
rates than payday loans
• Shop around.
Look for the lowest Annual Percentage
Rate (APR). Check with your local bank,
credit union, or finance company.
• Ask your employer
for an cash advance on your next
paycheck.
• Contact the Consumer Credit Counseling
Service
to get help with your debt.
• Check with family members and friends
for possible loans.
For Complaints:
If you believe that a payday lender has
violated ANY of your rights, please
contact the California Attorney
General's office at 1-800-952-5225
or the Department of Corporations at
1-800-347-6995. If you are in the
Los Angeles area, you may also call the
LA Department of Consumer Affairs at
1-800-593-8222.
For Help:
If you are frustrated or overwhelmed,
you may contact your local Legal Aid
or Legal Services office for help in
determining your legal rights or to seek
help in managing your debt. This number
can be found in your local telephone
directory. All calls are confidential so
you can feel safe calling regardless of
your legal status in this country.
Consumer Credit Counseling Services
can help you work out a payment plan
with your payday lender. Call
1-800-750-2227.
Source: calreinvest.org/pdf/brochure.pdf |
