You saw them in the corner and in the poorest areas of the city, with names like "Quick Cash", "Quick Loan", "payday loans, and car title loans. Begin to sprout across the country and soon rival Starbucks for the number of total sites.
This is the new trend in prey lending practices, but still able to fly under the radar of regulation in most states. They do not pay only the interest, the tax on tax.
But it sounds like a great comfort. Need money fast - to stop and in just five minutes out the door with $ 100, $ 500 and $ 1,000 dollars. But what is the real cost of convenience?
How does it work?
Money or payment in advance of payday loan / personal check normally guaranteed. Many companies in your bank account or credit card in addition to or instead of checks.
You write a check for payment, or accept that the amount debited from your bank account in the future, usually within 14 days (the standard pay period).
After the agreement / contract, you get the amount is less than the amount agreed to pay. The difference is the replacement for library services. And your money!
Why it works
Why is the company willing to loan money when? Standard loan money to those charges "is really a huge profit at your expense.
For example, say you borrowed $ 200 and the fee the lender charges $ 15 for every $ 100. Within 14 days, you pay $ 230 $ 200 borrowed. Now, if $ 200 from the obligation to maintain the $ 100 late fee or penalty for something that is probably worth it. But if you want the money, but today, you pay a high price.
You pay 15% interests on the loan is 14 days. This is 3.785% per annum compound interest! No wonder that lenders willing to lend money. If you borrowed $ 100 and pay back an additional fee of $ 15 for two weeks and a loan of $ 100 again along with $ 15 you paid, and continue to do so for a year 3785 will be $ 100 dollars by year end !
Maybe you should borrow money to pay for them.
What should be done carefully
* Early repayment charges. To pay the loan back early and storage fee.
* Expenditure on late repayment. Pay the full amount again when the date of payment.
* "Membership" fees. Some companies expect their clients as well as charging their customers.
Providing access to loans * direct debit from your bank account. Just hand the portfolio, it is faster.
* Small letters (as in all contracts). You know what you signed or unsigned.
* Expenditure bounced check or debit card. Make sure you have the money to your bank account or your bank to pay the fee.
* "Collateral" requirements such as the title car. Miss your payment and you are missing your car - permanently.
Is there a better way ?
Root problem here that could choke on your debt. Credit cards, deposit accounts, installment payments and the like can eat your income quickly. Ite may be time for the service credit counseling nonprofit or go to debt reduction plan for yourself.
Or it could simply be that the more you are wearing. You may need to take a few minutes a week and write down your expenditure. Then ranked full and to see where your money goes. So the income in the same period, and ensure that no more than you spend.
Sure, everyone gets in there sometimes. But there is enough room in your budget (ie spend less than you do) that the budget busters "and surprise expenses that might come to the meeting. This means that it can reduce the cable, magazine subscriptions or eating out. But Last time I checked, McDonald's has no money of $ 15 "fee" for your meals.
