Subscribe to Blog ContentPayday loans are short-term cash loans that you pay back on payday. Borrowers write a check for the loan amount plus the finance charge to get cash. Lenders hold the check until payday and deposit the check. The interest rate for two-week payday loans can range from 390 to 780 percent! So for every $100 they loan you, you owe $15 to $30 in interest. It won't take long for the number to get big fast and exceed the amount of the original loan.
Qualifying for a payday loan only requires a bank account in good standing, source of income and identification. Lenders don't do full credit checks or see if the borrower can afford to repay the loan. It may give you a fast and easy way to get cash for your business or when you live from paycheck to paycheck, but it can hurt in the end. Payday loans are for very short-term loans and best for those who will pay it off with the next paycheck.
When you can't pay off the loan, the lender will withdraw money from your account and charge you bounce check and high overdraft fees to increase the amount you owe them. It turns into a nasty cycle as the borrower can never afford the repayment terms or catch up with the insanely high interest rates.
The situation can become so bad that congress banned them for military families in 2006 and capped the interest at 36 percent. New York also bans payday loans and other states are taking action to create bills to license and regulate payday lenders or to limit the length of how long the lender can charge interest. However, for some politicians such a bill can be a conflict of interest because they get a chunk of campaign donations from the payday lenders.
According to research, people who use payday loans are twice more likely to file for bankruptcy than those who are turned down for a payday loan. PayDay Loan Consumer Information lists state laws and provides a calculator to show you how payday loans can burden the borrower.
Don't put yourself and your business at risk. Work with a financial organization that offers other business loan options such as lines of credit and factoring. Also ask the right questions to lenders and be ready to answer these questions. Do your employees a favor and educate them on the dangers of payday loans.
I found lots of interesting information here. The post was professionally written and I feel like the author has extensive knowledge in the subject. Keep it that way.
payday loans canada
Post new comment