Payday Loans Must Be Avoided at All Cost And Here’s Why?

The recent recession has made us all see some hard times, some more than others. Many people all over the US were reduced to living from paycheck to paycheck. Payday loans became the only way out when a crisis demanded urgent money.

But this country has rarely tried to provide the struggling a safe way out of poverty and it certainly isn’t going to start with payday loans. If you are caught up in a vicious cycle of never-ending loans and think filing bankruptcy will help, our chapter 7 bankruptcy lawyers will help you.

Before we go further let us learn what exactly a payday loan entails.

What Is A Payday Loan?

A payday loan is a quick solution to obtain fast cash. The reason they are so popular is that they require little to no credit requirements. One can apply for a payday loan with just their proof of regular income. Keep in mind these loans are short-term and only have a repayment period extending up to a few weeks. The idea is to borrow money in a stitch and then return it once the amount from the next payday is credited, hence the name.

Payday lenders usually set up shops, most of which can be found in lower-income settlements. This is a clear indication that these loans are targeted at the poor. Nowadays some lenders have also started giving out loans online.

Why Are Payday Loans A Bad Option?

Payday Loans Are Ridiculously Overpriced

Payday loans have an Annual Percentage Rate of 400% on average. In some states, the APR can go up to as high as 500-600%. In stark contrast, credit cards have an Annual Percentage Rate of only 28-30%.

Extremely Short Repayment Period

The usual 2 week period is often not enough for people to repay the loan. When this happens, the people have to borrow again or request a rollover. Renewing a payday loan costs them another round of fees. On and on it goes until the borrower is under so much debt that it is virtually impossible to get out of the muck.

Lenders Might Demand Access To Your Bank Account

Often lenders will pressurize you into sharing your account details. They reason that it saves you the hassle of post-dated checks. Of course, it is never safe to do so. When it is time to repay the loan they will keep attempting to withdraw the money even if there are no funds. It leads to abysmal overdraft charges and pushes you further down the pit of bad credit.

Let Reneau Law Help You

Put an end to haggling creditors. Bankruptcy has such a bad rep but sometimes it is the only way to start afresh. Our office in Oklahoma is a safe space and we will help you start preparing for bankruptcy with the right guidance. Our chapter 13 and chapter 7 bankruptcy lawyers are extremely skilled and will be on your case as soon as you clear your paperwork.

There is light at the end of the tunnel and filing for bankruptcy can take you closer to it.

**Disclaimer: The above article does not imply a relationship between attorney and client, nor does it aim to provide any legal advice.