Preyed Upon by Payday Lenders? We Can Help!
Payday was still a few days away, and you needed cash. The payday lender
ad said that you could get a cash advance on your paycheck. It seemed
simple enough. You wrote a check to the lender for, say, $300 and they
gave you $255 cash. They will not cash your check until your next payday,
and you can spend that $255 advance however you want. The difference between
the $45 that you paid and what you got in return is the fee for the “deferred
The whole process seemed really easy. Nobody asked you to produce collateral
other than your upcoming paycheck, and you did not have to go through
a credit check. All it cost you was $45, and as soon as your paycheck
hits your bank account, the debt will be extinguished.
It all seems fair until you look at the enormous amounts you are actually
paying, and start wondering if what the lender required as far as a fee
is even legal. As payday loan attorneys we can expose the lies you have
been told and help you settle your debt as quickly as possible for as
little as possible.
The Payday Loan Lie
In California, the maximum payday loan allowed by law is $300, and the
maximum fee a payday lender is allowed to charge is $15 of the amount
of the check, or $45.
Although it might not seem like much at first, if you borrow $255 on a
$300 loan that has to be paid back in two weeks, you are actually borrowing
at an annual percentage rate of 460 percent! APR is the total annual interest
rate that a borrower pays on a loan, and it includes all fees and charges.
When you know the APR, you know the real total cost of borrowing money.
Compare that payday loan APR of 460 percent to a car loan with an APR
of six or seven percent and you can see how ridiculously high the fees
and interest are on that short-term loan. Members of the military get
a break if the lender is following the law, but the rate is still high
at 36 percent APR, compared to other types of loans.
By law, the lender is required to disclose the APR for your payday loan.
They are required to prominently display the APR so you can see it and
understand it before you sign on for the loan. Not only is that often
not done, but payday lenders also hook people in for renewals and extensions
of the original loans without disclosing interest and additional fees
and interest. You can get sucked in so deep in this never-ending cycle
that you begin to doubt there is any way out, especially in situations
where payday lenders are charging usury rates beyond what the law allows.
Default rates on payday loans are said to be as much as 20 percent.