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Be Wary Of Payday Loans And Their High Interest Rate

Michael Agruss

Written and Reviewed by Michael Agruss

  • Managing Partner and Personal Injury Lawyer at Mike Agruss Law.
  • Over 20 years of experience in Personal Injury.
  • Over 8000+ consumer rights cases settled.
  • Graduated from the University of Illinois Chicago School of Law: Juris Doctor, 2004.

Payday loans are some of the most usurious, with aggressive interest and questionable terms. A recent report by the Pew Foundation (part of their Payday Lending in America series) explains why people turn to payday loans, how they’re finally able to repay the loans, and how they felt about the experience.58% of people who borrow payday loans have trouble meeting monthly expenses at least half the time; they’re consistently tight on money for basic expenses, not facing temporary emergencies. Out of all payday loan borrowers, only 14% can afford to repay the loan out of their monthly budgets. The Pew researchers found that unrealistic expectations and desperation drive people to choose payday loans, despite their usurious terms; 37% of borrowers reported being in such dire straits financially that they’d accept a payday loan on any terms offered. Standard interest on a two-week loan, over five months, will turn a loan of $375 into a $500 debt.Despite their presentation as insurance against overdraft fees, payday loans don’t eliminate this risk; for 27 percent of borrowers, they directly cause checking account overdrafts, through untimely withdrawals. People get stuck with fees from their banks and the payday loan outfits. In trying to pay off their payday loans, 41% of people needed a cash infusion—borrowing from friends or family, selling or pawning personal possessions, or taking out another kind of loan. One out of six people used their tax return to pay off the payday loan. In a telling statistic, borrowers favor more government regulation of payday loans by a 3-to-1 margin; people continually reported feeling frustrated and ill-used by the payday lenders. These kinds of loans are also immediately sent to collection agencies on default.If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. We want to help you, too. 

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