It is always important to read the “fine” print when agreeing to anything. This is especially true when signing up for a payday loan. Interest rates are often 300% – 1000%. Sometimes referred to as “predatory loans”, payday loans are designed to give the customer money quickly and allow them to pay the loan and interest back over time. Read on to learn about two truly terrible scenarios in which desperate people agreed to terrible payday loan terms.
Payday Loan Victim Number One – “Bob”
Bob’s story began over 12 years ago. Due to a medical emergency, Bob became the only earner in the family. Medical bills totaling at over $20,000 and recent events, forced Bob to take out five payday loans which totaled at $2,500. These loans required Bob to make two $95 payments each month per loan. Keep in mind the principal balance of each loan was only $500. It took Bob and his wife 5 years to pay off the loans and, in the end, they paid over $50,000 in interest. As a result, Bob and his wife lost their home.
Payday Loan Victim Number Two – “Ed”
Ed, a veteran and Social Security beneficiary, ran into some car trouble. The repairs were estimated at $400. Unable to cover the costs, Ed went online and took out a $400 14-day loan. In most cases, if a person cannot pay off a 14-day loan in the agreed upon term, there is a renewal option. When the loan is renewed, the borrower must pay a fee and interest continues to accumulate. In an attempt to pay off the existing loan, cover his rent, and avoid bank overdraft fees, Ed took out more online loans. In the end, Ed borrowed over $3,000 and owed well over $12,000. He subsequently lost his apartment and became homeless.
Payday Loan Quick Facts:
- Over 12 million payday loans are handed out each year in the United States.
- The 12million loans have fees totaling at over $9 billion.
- A 14-day loan averages $55 in fees if paid off on time.
- The average payday loan borrower is in debt for 5 months of the year due to loan fees and interest.
Before you subject yourself to the horrors that come with payday loans, take a look at your other options. If you have unsecured debt such as credit card or medical bills, you may be able to get it forgiven utilizing a tool such as bankruptcy. Contact Elias Dsouza today for a free consultation and take control of your financial situation once and for all.