subject: Avoiding Payday Loans Traps [print this page] Payday loans online can become a trap and are not used on a one-time basis as originally claimed by the lending entities. Individuals who must borrow money this way are usually in desperate situations. The high rates make it difficult for many borrowers to repay the loan, thus putting many of them in worse situations in their financial history. They often extend the loan by incurring extra amounts of fees because they cannot pay them back in time. Thus, many people end up paying far more in fees than what they borrowed.
One payday loans UK has said that only two percent of borrowers take the loan. He further added that he expects all of his customers to default sooner or later. Stories from payday patrons make the results of these subsequent loans clear. Consumers take them to meet a quick need, find themselves unable to meet their needs on their next payday, take subsequent loans and quickly get trapped by the devastating charges and fees.
Payday lenders claim they are the only option for debt-strapped borrowers. But borrowing more money at triple-digit interest rates is never the right solution for people in debt. Instead, cash advances make problems worse. Virtually every borrower takes more than one payday loan and thus the loans are similar to an addiction. This is not a legitimate loan product that benefits borrowers. In fact, because most people believe they could be prosecuted for passing a bad check, the payday loan suddenly becomes their debt priority. Thus, the original debt problems that brought them to the lender often cannot be resolved. Payday loan rates are way too high, especially given their low risk. The lending entities claim their extremely high fees are necessary on account of the risk being taken and its high loss ratio. The evidence of the low risk is the rapid growth of the industry, both in the United Kingdom and the rest of the world.
And the worst part about the payday loan industry is that borrowers are easily deceived by payday loans. This whole transaction is inherently deceptive. By requiring borrowers to turn over a post-dated check, borrowers are often coerced or harassed by illegal threats or collection practices. For example, they will be threatened with jail for passing a bad check, even though the law specifically says they cannot be prosecuted if the check bounces. Payday lenders often deposit a check before the agreed-upon date, causing the check to bounce and imposing more fees on consumers.
So the next time you hear an advertisement about payday loans stop and think for a while that they are well capable of ruining your lives.
