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What is a payday loan?
How does a payday loan
work?
Are payday loans bad?
Who regulates payday
loan lending?
What is internet
payday lending?
How much
will payday loan settlement help?
What is a payday loan?
A payday loan, also
called a paycheck advance or cash advance is a short-term loan
that is intended to help a borrower with his/her expenses until
their next paycheck. According to the Consumer Federation of
America, typical payday loans vary between $100 and $1000 and
average between two and four weeks. The average annual interest
(APR) is estimated at 470%. Very often, the shorter the loan
term the higher the interest.
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How does a payday loan work?
Payday borrowers
write a personal check or electronic access to their bank
account for automatic withdrawal for the amount being borrowed
including a finance charge. Lenders loan the borrow the amount
in cash and hold the check until the borrowers next paycheck. At
that time, borrowers can pay the loan off by paying the
principle and finance charge, or simply the finance charge and
roll the loan over to another month.
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Are payday loans bad?
Although payday
lending has come under controversial scrutiny in the last couple
years, the truth is that there are situations when a payday loan
is very helpful. However, just as with any other loan, but
perhaps even more prevalent with payday loans, borrowers must
practice responsible lending.
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Who regulates payday
lending?
Although payday
lending is largely regulated at the state level, in 2006,
Congress passed a regulatory law, namely The John Warner
National Defense Authorization Act, capping the lending to
military personnel at 36%. The Defense Department labeled the
payday lending institution "predatory". Some states, including
DC and New Mexico have passed similar regulatory laws with
maximum interest rates and Georgia banned payday lending
entirely.
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What is internet
payday lending?
Internet payday
lending is when a consumer or potential borrower fills out a
form or online application and faxes it to the lender with the
requisite information including bank account numbers and social
security number, a copy of a personal check and/or bank
statement. The payday loan is thereafter, directly deposited
into the consumer's account and on the due date the finance
charge is automatically withdrawn by the borrower.
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How much
will payday loan settlement help?
While there is no
way to estimate your savings, because each payday lender has
unique circumstances with literally hundreds of contributing
factors, payday loan settlement may reduce your monthly payments
and ultimately eliminating your payday loan debt. You have
nothing to lose besides 10 minutes of your time. So fill in the
form and find out if we can help you get our of the cycle.
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