Escape the Payday Loan Trap
Payday loans offer easy credit to debtors with poor credit, but with excessive fees and interest rates as high as 400% that convenience comes at a high price.
Payday loans are extremely expensive compared to other cash loans.
A $300 cash advance on the average credit card, repaid in one month, would cost $13.99 finance charge and an annual interest rate of almost 57%. By comparison, a payday loan costing $17.50 per $100 for the same $300 would cost $105, if renewed one time, or an annual interest rate of 426%.
Payday lenders hold a borrower’s post-dated check or tap directly into his or her bank account to withdraw the money on payday. With most traditional loans, the principal and interest are paid down in regular installments.
With a payday loan, the borrower must pay off the whole loan on the next payday.
That’s often impossible, so debtors repeatedly pay hefty fees with nothing going toward the principal.
Internet payday lending adds security and fraud risks to payday loans. Consumers apply online or through faxed application forms. Loans are direct deposited into the borrower’s bank account and electronically withdrawn on the next payday.
Many Internet payday loans are structured to automatically renew every payday, with the finance charge electronically withdrawn from the borrower’s bank account.
When debtors are no longer able to make their monthly payments payday lenders often threaten them with criminal prosecution for passing a hot check, leaving them no alternative but to continue to pay excessive fees to renew their payday loans.
Bankruptcy offers the most cost-effective way to escape the payday loan trap and stop threats of criminal prosecution.
If you have a large number of payday loans, we can immediately stop threats of criminal prosecution, even before your bankruptcy case is actually filed. Call the Law Office of Howard Tagg at (903) 581-9961 today to learn how to get out the payday loan trap once and for all.