Your Questions About Payday Loans
Carol asks…
How much can payday loan lenders charge?
My husband took out a payday loan for $619. He paid back $500 last month and now they brought the balance back up to $619. Is that legal? I know that they can charge 15% finance charge and other fees but $500 in a month?
The Expert answers:
Yes it is legal. The Consumer Federation of America (CFA) is warning consumers to exercise extreme caution when using Internet payday loan sites, where loans due by the next payday, can cost up to $30 per $100 borrowed and borrowers typically face annual interest rates (APRs) of 650% or more. A 15% finance charge is unheard of in the payday loan industry. The fees on these loans can be a percentage of the face value of the check — or they can be based on increments of money borrowed: say, a fee for every $50 or $100 borrowed. The borrower is charged new fees each time the same loan is extended or “rolled over.” Your husband needs to pay his loan off as soon as possible and avoid falling into this trap in the future. The amount he owes will skyrocket each time he rolls the loan over. He needs to get out of this cycle now. Payday loans are an excessive waste of money.
Lizzie asks…
Do payday loan lenders file criminal or civil charges if you default on a loan?
Hi,
I took out a payday loan and have defaulted because my bank account is overdrawn. They are leaving voicemails stating it is going to the legal department and to court. Is this a criminal matter or civil as in they can only sue me, or can I be in criminal trouble for defaulting on a loan? Please, only legitimate advice and answers.
The Expert answers:
They shouldn’t need to… The interest rates are so high on those loans that people should know better than to either take out such a loan or default on it. What they can do is harass you to the point of repaying it, while it’s defaulted status hurts your credit score.
Lisa asks…
Do payday loan lenders have to work with you?
I live in Oklahoma and have found myself in payday loan debt. I had to close my checking account due to me losing my checkbook. I cannot afford to repay them all at once and one place told me I had to pay 50% at a time. That is 250!! It is completley stressing me out!! They call me all the time. I was wondering what the laws are here and can they sue me or will it be sent to collections? I am just trying to figure out the best solution and fast!!!!!!!!!!!
The Expert answers:
Didn’t you read the rules when you got the payday advance – I’m sure everything was spelled out in writing – of course they can sent it to collections – why is paying it back in halves so outrageous? – normally you have to pay it back in full with your next paycheck after getting the loan
Ken asks…
payday loan lenders for people on benefits?
Hi
I need a small payday loan-I am on dla and incapacity-does anyone know any payday lenders that accept people on benefits/ I can’t find any.
thanks
The Expert answers:
Sometimes its not a great choice but the only choice. Its tough to deal with sometimes.
Betty asks…
what are chances for payday loan lenders or credit cards other then your banks sueing or taking u to court ?
The Expert answers:
When you take out a payday loan you sign a contract with your signature which outlines your obligation to pay. If you do not pay the loan back, the payday loan company has every right by law to either deposit your check they are holding, and if they money is not there you are charged NSF fees and then taken to court, sued and if granted a judgement, your wages are garnished. Payday loan companies are there as a “convenience” loan to help when you are short on cash. When abused, you get in the bind of not being able to pay them or pay any of them and results in a suit against you…then goes against your credit.
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