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Beware: Payday Loan Pitfalls Abounding in the New Year
January 6th, 2012
Some companies will be adding a 900% interest fee onto the loan
The holidays are over and more people are turning to payday loans to help make rent or buy food for their families after the heavy spending in December. With the numbers on the rise, the Consumer Fraud Task Force is warning consumers about payday loan pitfalls.
Open trap
Judy Mills says the open sign on payday loan companies can sometimes be an open trap to a revolving door of debt. “It can sometimes be up to 900% that can be charged on there,” Mills says. “And the worst thing anyone can do is to get caught up and take out another loan to pay off the first one. That’s the start of the debt snowball.” The President of the Southwest Missouri Better Business Bureau says that’s when the problems start.
“Payday loans can fulfill a needed purpose, but you got to be sure if you take one out, you got to be able to pay it off when the payday comes,” Mills says.
60 Listings
A quick look in the phonebook and you’ll find 60 listings for payday loans scattered all across Springfield. Across the state of Missouri there are more payday loans than there are McDonalds. Mills says nearly three dozen payday loan locations in Springfield have complaints filed against them.
Complaints
Mills says before you head to one of the locations, here are some things to think about:
- Check with your local bank to see if it offers short term loans and get details.
- If you’re having trouble paying your bills, contact your creditors as soon as possible and ask for more time.
- If you do take out a payday loan, read the agreement thoroughly and know exactly when it’s due.
- Complaints can be filed on the Better Business Bureau’s website.
- You can also call the Attorney General’s office.
Interest rates
Mills says she thinks payday loan companies are more open now about their interest rates than they used to be, but it’s always better to do your homework first. “We have always said that if it sounds too good to be true, it probably is,” Mills states. Some states have passed laws to put a cap on the amount of interest a person can owe on payday loans.
Choose Your Payday Loan Provider Carefully
August 2nd, 2011
Woman Regrets Entering Personal Info Online
A woman who lives in Gastonia has reported that she applied for a payday loan online and then started getting harassing calls, even though she decided not to take the loan.
Online payday loan
Heather Pope is a single mother of twins and was searching for money to pay bills. A friend suggested she apply for a payday loan online. Pope entered all of her personal information, including Social Security and bank account numbers, for a $1,500 loan. But she had second thoughts and said she never clicked on the confirmation for the loan.
No loan
“I did not receive any money from anybody, whatsoever,” Pope said. Instead, she said, she got money from her father. But later, someone began calling her cell phone and her work, threatening legal action if she didn’t repay a $1,500 loan. A man left the following message: “Don’t disregard this message and give me a call as soon as possible. It will be in your best interest. I was even scared to go to my door in case it might be him, you know, or it might be the cops,” Pope said. “But like I said, I never got any money, so I didn’t understand why he was doing that.”
Others
Pope said she found other victims online complaining of the same thing after not going through with a payday loan online. Also, Pope said, she’s now being offered loans by other callers she doesn’t know who got her Social Security and bank accounts numbers online.
Warning
The Better Business Bureau and law enforcement officials said you never know who you’re dealing with when applying for loans online. Their advice is to simply not do it. Pope is now sounding her own warning. “Beware of entering your personal information online because there are predators like this man out there,” says Pope.
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