The trouble with loans payday loan
August 17th, 2007
How payday loans work ?
Payday lenders make a fortune by preying on consumers who have limited access to other forms of credit.Loans payday loan offers come from out-of-state lenders, because the amount of interest that can be charged by a New York lender is set by law. Cashing in on high interest rates — and the borrowers inability to make payments — is the payday loan sting.
Lenders offer high interest loans guaranteed by your paycheck. Say, for example, you receive an offer to borrow $100 for two weeks. You might be asked to give the lender a personal check for $115. That $15 fee is the same as paying interest at an annual percentage rate (APR) of 391%. Since many of these loans are offered on-line, the loan is made electronically.
The lender holds the check until the next payday and then deposits it. You redeem the check by paying the $115 in cash. Or you can pay another fee to extend the loan (“rollover”) for another two weeks. Eventually, rollover fees will be higher than the original loan amount.
Entry Filed under: Instant Loans, Credit Repair, Commerce