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Many families in America struggle
with their finances each month. They work hard just to
pay their bills. Often, these families run out of money
before their next payday. When this happens, borrowing
from a payday loan store is not always the best option.
These high cost loans must be repaid when the next paycheck
comes, and this does not solve a financial crisis. In
many situations, these loans make the problem worse. Dealing
with financial problems without adding any more debt to
the situation takes work and creativity, but it will save
you money, stress, and anxiety.
Avoiding Needing Quick Cash
Payday Loans
One way to avoid needing quick cash payday loans is to build
an emergency fund of $500. Even if your household budget
is tight, an emergency fund is necessary to deal with the
ups and downs of life, including unexpected bills and emergencies.
Start small, saving just $10 per paycheck. If you have an
electronic deposit set up with your employer, ask if you
can have a portion of that money deposited into your savings
account. You can also visit www.AmericaSaves.org to find
ways to save money.
Creating a household budget is a good tool to help you find
ways to save and track how you are spending your income.
Write down all your income and expenses. Create a workable
spending and savings plan with each member of your family.
Be sure to set aside money from each paycheck to deal with
those bills that come due at regular intervals, such as
once or twice a year. Also, plan ahead for those special
expenses, such as holidays and vacations.
Using the Internet to borrow money
carries unique risks. Not only will you have to pay the
high cost for a payday loan and deal with the short repayment
time, but borrowing money online also adds privacy and security
concerns. Signatures are signed electronically on contracts.
Also, required disclosures are sent electronically, and
all you have to do to bind yourself to a contract online
is click the "OK" button. Also, Internet payday loans can
cost quite a bit more than those you receive from a storefront
lender.
When you apply for a payday loan on the Internet, you will
be sending personal identification information, your Social
Security number, and your bank account information to the
lender. If the websites are unsecured, your security and privacy
are at risk.
All Internet payday loans require you to give the lender the
ability to electronically access your bank account to deliver
your money and take out fees and payment. This creates a real
risk for identity theft and fraud. Most consumers are disclosing
their financial information to lenders they do not know.
Borrowers can be trapped into debt with Internet payday loans.
Because many online payday loans automatically renew each
pay period, the lender can withdraw the finance charge electronically
without having the borrower pay any principal towards the
loan. When consumers are ready to pay the principal, they
have to take extra steps to make sure that the lender closes
the loan correctly.
Finding these lenders is often difficult. Sometimes Internet
payday lenders are either offshore, or they offer so little
information that a consumer or consumer advocacy agency cannot
find them. This allows the lenders to follow foreign laws
or the laws in states that do not have many consumer protections
in place. While these lenders are supposed to adhere to the
laws in the state where you are getting the loan, the state
regulatory agencies have a difficult time enforcing these
laws against virtual lenders.
If you have a complaint against an Internet payday lender,
file it with your state Attorney General, state regulator,
and the Federal Trade Commission. Remember, it does not matter
where the Internet lender is located, it must follow your
state's credit regulations.
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