Money is tight for so many people in this bad economy and Christmas is coming! You may be thinking of taking out a payday, title, or consumer loan to make ends meet. Short term loans can help if you can pay them back. But consumer advocates warn you could end up in much more debt later.
81-year-old Mattie Anderson says she took out a $600 consumer loan. Said Anderson, “When I got these papers in my hand and got to looking at them, I thought, I’m being stolen blind.“
At 225% interest, the loan would cost her more than 1700 dollars to pay back over a year. Said Anderson, “The payments are $156.21 a month and I live on social security and there was no way in the world.“
Other people turn to payday or title loans to pay for christmas presents or bills. Payday loans usually charge a $15 fee for every $100 loaned. It’s all due back in a couple of weeks. Payday loans can help families if they can pay the loan back. Many find they can’t.
Said Brent Bishop, credit counselor with Compass of Carolina, “We just see so many people that don’t plan how they’re going to pay it off in the two weeks. Once there’s no money and have to get a second one to pay the first one, and third one to pay the second one, and so on.“
Rather than pay high interest, Bishop suggests getting a small loan from a credit union or borrow from friends, family, or even use a credit card, where the interest is lower. Said Bishop, “Even sometimes advancing off an overdraft line of credit might be a less expensive alternative than a payday loan.“
After seeing Mattie Anderson’s loan, her son paid it off for her. Said Anderson, “I wouldn’t be able to buy groceries.“ But not everyone is quite that lucky.
A new bill was just proposed to ban payday loans. Previous bills to limit or ban payday lending have died in committees. We’ll keep you posted on the new bill.
Source: Wspa.com