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Paying, and paying, and paying payday loans

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If you don’t have the cash or credit to cover a financial emergency, you might be thinking about getting a payday loan. But some payday lenders are not honest about how they collect on those loans and take more payments than they said they would.

The FTC sued Harvest Moon and other online payday lenders for their alleged practices in extending high-fee, short-term “payday” loans. In websites, telemarketing, and loan agreements, the companies told people they would repay a set amount with a fixed number of payments withdrawn from people’s bank accounts. But, instead of doing what they said they would do, these companies kept people on a costly treadmill repeatedly taking money from their bank accounts, paycheck after paycheck, without ever reducing the amounts they borrowed. As a result, some people wound up paying around $1,200 for, say, $250 loans, says the FTC.

What’s more, the companies allegedly debited bank accounts without notifying people and getting proper authorization. The FTC also says that the companies did not give people clear and accurate information about the loans’ key terms, and unlawfully took remotely created checks after selling loans via telemarketing. And when people tried to get copies of their loan agreements or talk to someone about the payment terms, the FTC says the companies made this virtually impossible. In many instances, people had to close their bank accounts to get the payments to stop, according to the FTC’s case.

If you need cash quickly, remember that payday loans are often short-term, high-cost loans. Learn how to manage debt and budget for emergencies. And report it to the FTC at ftc.gov/complaint if a payday lender tricks you into paying more than it led you to believe.

 

Tagged with: bad credit, credit, shopping
Blog Topics: 
Money & Credit

Comments

I fell into the payday loan trap. Don't do it or make any of them mad; I made a company mad because I didn't take their offer so they sold my information to a bad person and I got scammedbout of $2500.00. Don't mess with payday loan companies. I still have people trying to open credit in my name and still try and collect money I don't owe.

Another issue to watch out for is Seniors getting dubbed into too many loans. I personally know of a Senior with Alzheimer’s that had four loans with small loan companies in her town. She was on a debt roller coaster. There should be a law that small loan companies must check to make sure Seniors don’t have more loans out than they can financially handle. This woman was finally helped by her family with screaming loan companies demanding money all at once.

Don't even think about payday loans. My brother in law was paying on a $ 500.00 loan for two years. They kept taking money out of his bank account until the amount went up to nearly $3,000. These people are liars and you can't even get them on the phone. Bad idea !!!

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