Have you read the fine print??????? Do you know that many of those places charge over 300%APR for a loan? OMG…300%....no, that’s not a typo, there shouldn’t be a decimal in there, three hundred, not kidding (unfortunately). Let that sink in for a minute.
So what does 300% APR mean exactly? Well, if you go there and get a loan for about $1000, and pay it back over 6 months, you will pay back roughly double what you borrowed. That’s right, they give you $1,000 and you pay them back about $2,000. If you can pay it back on time exactly as agreed upon. As if that isn’t bad enough, if you can’t pay it back on time (which is what often happens), they can automatically withdraw what you owe from your account. What typically happens when they try to do that? You overdraw your account and are charged a fee. Then they try to withdraw the money again, and you probably still don’t have it or you would have sent it to them, so you overdraw your account again and are charged another fee. Wait, this happens one more time, because they can try to take the money 3 times for each payment, so there’s another fee. Now you still owe your payment, plus you wasted all that money on 3 NSF fees, and the payday loan place probably has some sort of late fee or NSF fee too. Do you see how this can start to snowball quickly and put you deeper and deeper into debt with no good way out? It happens too often, and we don’t want it to happen to you!
To give you something to compare to, that same loan here would come with a rate of between 3% and 16% (rates are determined by a number of factors including your credit score and history, amount of unsecured debt, and past bankruptcy). Even using our highest rate of 16%, if you borrowed $1,000, you would pay us back roughly $1,050. That’s quite different from the example above where you borrow $1,000 and pay back $2,000. What would you do with the $950 you saved? You can probably think of lots of things, that’s a lot of money!
So JUST SAY NO to Payday Lenders (or anyone else charging a ridiculously high interest rate for that matter). Call us, tell us your situation and let us try to help. Whether it’s a loan here, at a dealership, a bank, or another credit union, know what you are agreeing to before you sign anything.
Here are some questions you should ask every time you apply for financing anywhere:
· Is there an application fee?
· What is my interest rate?
· What is the repayment period?
· What is my monthly payment and can that amount change? If it can change find out what would cause it to change, how often it can change, and how much it can go up.
· Is there a penalty for prepayment?
· How much will I pay in interest over the life of the loan?
· What happens if I default?
Post by: Cari J
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