Wish to opt for payday loan? Here are some interesting facts about the same
If you believe financial experts, people who opt for payday loans extend their two weeks of loan term for up to 200 days! Yes, this may sound weird, but unfortunately, most of the payday-loan lenders cannot afford to pay back their loan on time. So, they either roll their loan further or opt for another loan to repay their first loan. Not one or two, but 90 percent of payday loan customers practice the same trick, and end up paying huge interest on such loans. Four in every five loans are renewed or rolled over after completing their duration which is two weeks in most cases.
According to the results for study conducted by Center for Responsible Lending in the US, most of the payday loan defaulters default on their first loan itself. Here are some more details.
Even borrowers with lengthy repayment term may become defaulters
Several studies have already made it crystal clear that most of the payday loan lenders do not have the capacity to borrow and repay on time. Research conducted by Center for Responsible Lending was the latest one that highlighted the same issue. Around 1,000 payday loan lenders were monitored as part of the study. All these borrowers had opted for quick cash loan with two years pack back term, and unfortunately, more than 50 percent of borrowers under lens ended up defaulting during first year itself.
Post-dated checks and electronic payment related fees
In most cases, quick cash lenders ask borrowers to set electronic funds transfer or submit post dated checks for loan installments. These checks are submitted to the bank on due date. If they bounce due to insufficient funds, borrowers are charged non-sufficient funds related charges by their banks as well as quick cash companies. This may also ruin that individual's credit ratings.
To put it in simple words, borrower who fails to maintain sufficient balance for $10 check may be liable to pay $35 overdraft charge or around $20 check bounce related fees for simply not maintaining $10 at the time of check encashment. Some banks offer overdraft limit to their customers, and they do pass all the issued checks. But, what is the point in paying $35 for passing $10 check?
60 days overdue loans are sold to third parties
Center for Responsible Lending's study also pointed out that around 40 percent of quick cash loan accounts turn 60 days overdue to nonpayment of installments. Lenders may sell some of these accounts to third parties, debt collection agencies who use aggressive tactics to recover their money from borrowers. Most importantly, these collection agencies also charge various fees and report accounts to credit bureau.
Protection to customers
Not just this study, but several other financial experts have already suggested some changes in the way payday loan companies work. Besides 36 percent interest rate cap on all such loans, experts have also urged Consumer Financial Protection Bureau to force lenders to check borrower's payback capacity.
Choosing wisely is important
There are perhaps hundreds of lenders available in every city. In fact, one report suggests that number of payday lenders in some states is more than number of Mc Donald's fast food outlets. It is advisable to take advantage of these options and choose the best deal possible.
Some of the most important factors to be considered are- interest rate, various fees, installment check bounce charges, late payment charges, and the loan's payback term.
Instead of visiting any particular financial institute's website, it is advisable to visit third party comparison sites or portals that allow borrowers to choose loan offer from several options.
If you are looking for cash advance loans, you should visit QuickPayDayLoansUs.com
The portal works in a simple way; it simply collects all the information from lenders and then presents it to the borrower as per his or her requirement. Most importantly, the website offers best possible cash advance loans option to both, borrowers with good as well as lower credit rating. You can opt for any loan amount between $100 and $2000. Approval and rejection related decisions are conveyed to the applicant in prompt manner. The company has joined hands with some of the best lenders in the United States.