Are Pay Day Loans Evil or Heroic?

Payday loans are taken out by over 12 million Americans a year.

These loans have seemingly attractive rates…allowing people to get an advance on their money for a "low fee." These loans prey on the desperate, but can sometimes seem like a good idea.

However, the truth may not be quite as pleasant. Follow the link to our blog post below to find out how a Payday Loan works and whether or not it's a good idea for you.

For someone with no credit or bad credit scores, payday loans can be a stopgap between a bill being due and an approaching payday.

But if not paid off immediately, these short term, emergency loans can turn into what the Consumer Financial Protection Bureau, or CFPB calls a "long term expensive debt burden" and trap consumers in a cycle of debt "that cause them to be living their lives off money borrowed at huge interest rates."

Or at least that is what I thought they were all about until I decided to help a client who has a poor credit score secure a loan that she intended to pay in two short weeks when she got her income tax return.

I googled pay day loans and began filling out applications. You no sooner get an app completed and click on submit and another window pops up. It's easy to mistakenly think that has something to do with your approval so you fill out that form. Before you know it tons of loan companies are calling you and sending you emails.

I listened to a few representatives thinking that it was possible to get a loan. I worked my way through their approval process. All she needed was $700. There wasn't a company out there that would loan less than $1000. Once you paid for a credit report , they stated approved but just to ensure that I was serious I would need to get a money back paper voucher either green dot or vanilla. One company even had me fill out what looked like a loan application with terms.

I was stuck on the paper voucher. They said that all you had to do was put one installment payment on that, call them with the four digit number that you scratched off and you could spend the installment on bills or anything you needed to. You would be wired the money within 30 minutes.

I googled this paper voucher and a rush of complaints were there. People who expected to get a loan and they lost their installment payment with no way to get the money back. My client was lucky, she was able to borrow the money from her uncle. For her there is a happy ending. For lots of individuals who were already in debt and short cash, there were even deeper in debt with their experience.

It has also occurred to me that the people working these scams may not even be in this country. I envision them sitting in a coffee shop calling people from their laptop. If you are fortunate enough to get a phone number that the representative will actually answer, that number the next day has been disconnected.

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