Payday loan problems
Payday loans
are short-term, unsecured loans that consumers agree to
repay from their next paycheck. Payday loans are priced at a
fixed dollar fee, representing a high cost finance charge to
the consumer. Because this type of loan has such a short
term of maturity, the cost of borrowing is very high.
In our opinion payday loan companies are nothing more then a
legal form of loan sharking and are typical not affiliated
with and reputable bank or financial lending institution.
The Payday Industry is plagued with greedy lenders who look
to exploit consumers who are a suffering financial hardship.
It not surprising that new lending and compliance laws have
brought many "sharky" payday lenders to their knees.
Many borrowers who apply for payday loans have cash flow
difficulties, and very few use these high cost loans like
most consumers would charge their favorite credit card . In
addition, many payday lenders perform minimal analysis of
the consumers ability to repay their payday loan debt. They
typically only require a current pay stub, proof of income
and a valid checking account. More reputable payday lenders
utilize scoring model systems, track bounced checks,
Judgment debt, defaulted payday loan databases, and cross
reference other nation debt directories. Payday loan
companies rarely obtain credit reports from major national
credit bureaus (Equifax, Experian, TransUnion). The
combination of the borrower's limited financial capacity and
the limited financial credit analysis make payday loans a
losing situation for most consumers.
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