Many Americans live “paycheck to paycheck” and very few have any savings and no emergency funds. This means that a single financial surprise – such as a car repair, broken appliance or medical emergency or worse COVID 19 – can seem insurmountable. If you’re dealing with an economic crisis like this due to COVID 19 or other financial surprise, you might be tempted to use short-term lenders for a loan.
Before you get a pay day loan, however, you should understand exactly how these predatory loans work and the risks associated with them.
How do payday loans work?
A payday loan is a relatively small loan offered without a credit check on a very short-term basis. The borrower provides proof of income/employment and basic vital information, along with a post-dated check, and leaves with money in hand. The lender will not check the credit but will provide funds at a very high interest rate.
The high-interest debt cycle
Because these loans are supposed to be short term, the interest rates may not seem that shocking initially but it is common for someone who borrows only a few hundred dollars to end up paying more than a quarter of the loan’s total value in interest and fees.
Have you considered bankruptcy?
A payday loan is not the answer if you are struggling to pay your debts. It may seem like a quick fix but in the long run it will make things much worse for you and you just might have to file for bankruptcy protection anyway.
Bankruptcy may be the best way for you to get out from under an insurmountable debt load. Bankruptcy can be the right option to enable you to make a fresh start. Talking through these options with our office can help you make the best decision during this very stressful time.
If you or anyone you know would like help with unmanageable debts, unpaid debts, harassing creditors, lawsuits and garnishments for unpaid debts, or any other debt relief, The Santos Law Offices, PA can help. Call to schedule an appointment today at: 866-661-3816. We continue assisting clients via telephone, email and video conference during the COVID 19 crisis.
DISCLAIMER: This blog and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent counsel for advice on any legal matter.