There are stories all over the news right now about payday lenders behaving badly and a regulatory crackdown on them.

This isn’t news to the attorneys at Bruce C. Truesdale.  We find it more interesting that the regulators seem to be more concerned about putting the rates in big letters than they are about capping the abusively high fees in the first place.

The nutshell version: The feds want it to be clearer to you that you are going to be charged a big pile of fees, they aren’t going to stop you from being charged a big pile of fees.

But this is DC and they can’t be bothered with simple things like logic so we will give you the whole story on why payday lenders are a very bad thing for consumers.

A payday loan may seem like a good deal, you can even get “Deposit Advances” from your bank now lending some reputability to the practice, but AVOID THEM LIKE A PLAGUE.    Here is why:

1.  Unbelievably high fees.  Even the reputable ones through big commercial banks like Wells Fargo have 180% interest rates.  This means if you borrow 500 bucks and the bank is able to pay itself in a timely manner you will pay $900.00.  That is an insane return on a short term loan.  The less reputable lenders online charge upwards of 300%.

2.  You are handing over banking information and this can create an endless cycle of misery.  If you take your loan on November 1 and promise to pay on November 15, the lender will hit your bank on November 15th no matter what.  If you do not have the funds to pay that massive interest rate in your account you will be subject to overdraft fees AND fees by the lender.  Some of these lenders will hit your bank multiple times over several days/weeks causing you to incur hundreds of dollars in overdraft fees that are hard to dig out of and still pay your regular monthly bills.

3.  Their collection practices are BAD.  Payday lenders are not permitted in New Jersey so you are dealing with largely unregulated online institutions.  This means that when they call you they are hard to track down and because of this they feel like the federal rules on debt collection don’t apply to them.  They are going to threaten to arrest you at your job, send the cops to your house, and even take your house.  I have heard of one woman who had a payday lender threaten to kill her dog.  They can’t do any of these things but they can make life pretty miserable by threatening you constantly.

4.  They sell your phone number to scammers.  If I had a nickel for every time a client told me they paid a scam artist because they were afraid of the consequences I listed above I could retire.  I am hoping this post will help slow my road to retirement.   Let’s say you pay the payday lender on time.  But two days later you get a collection call from some agent saying you still owe money and you better pay it now or they will send the Sheriff to arrest you at your job.  The collection agent says that you have to pay them with a pre-paid debit card.  DO NOT DO THIS.  THIS IS A SCAM.  HANG UP ON THIS GUY RIGHT NOW (especially if he is Indian and says his name is Peter…that guy is bad news and calling half of New Jersey right now.)  If you pay this person you will never see that money again, it will pay nobody that you owe money to and the calls will just continue.

If you are thinking about a payday loan your money troubles are probably bigger than just that payday loan and taking one out could just take you even further down a bad financial path.

If you need help getting back on the right financial path, call us instead of going to a payday loan service.  We will talk to you about how we can help you get back on the right financial track through a bankruptcy case.

Interested in talking to us?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.