When many consumers are in desperate need for cash they turn to payday loans or check loans. Many of these payday lenders are located in urban areas and target individuals and minorities who are struggling to make ends meet.
The concept behind a payday loan is simple. Consumers write a check for the amount they want to borrow and the lender gives the consumer the cash value minus a fee. Now perhaps the most egregious part is that the annual percentage rate could be be 500% or higher. That is not a typo, five-hundred percent! While some consumers pay back the face value of the loan with fees, many get caught in a continuous cycle of debt by extending such loans or rolling them over for another period. As fees add up and the stratospheric interest rates accrue, consumers are trapped.
Although these loans could help you overcome an immediate need for cash, their value is only immediate. The long term effects of such loans could have you filing bankruptcy quickly than you may think. A payday loan is dischargeable under a bankruptcy similar to other unsecured debts.
Nonetheless, my advice is to steer clear of payday loans, for the potential long term damage to your financial livelihood far outweighs the immediate need for cash.
If you have questions regarding payday loans contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!
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