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Ask Susan Responses
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Miscellaneous: Payday Loans |
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More Ask Susan |
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I am a professional person who is relatively intelligent. However, earlier this year I took out my first payday loan, paid it back and took out another one and paid that one on time. I had some personal issues and took out a total of seven more loans within a very short period. It was so easy for me to get the loans and I did pay a few off on time. I am at the point recently where I owe twice as much as I take home. What can I do? -Janet |
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Janet,
As you know, payday loans equal costly trouble. My advice is to repay these loans as quickly as possible to break the cycle and avoid the exorbitant roll-over fees. Is it possible for you to sell assets or take on additional temporary work? I realize that these options may not be desirable; however, I do not know of any simple solutions. You might also look into another type of loan to pay off these debts (home equity, for example).
The Advice Team |
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I have gotten myself into a mess with payday loans. I have six payday loans that cost me $400 per month. Can a counseling service put these debts on some kind of a repayment plan? -Mike |
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Mike,
Although they are called loans, pay day loans are not truly loans. When you get a pay day loan, you are actually writing a check and getting money for the check you have written. Since these are checks written and not loans taken out, we cannot include pay day loans on a debt management program.
Sorry,
The Advice Team |
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I'm trying to catch up on bills, feed my family, and find a place for us to live (staying with family at the moment). I just got a decent job, so are payday loans a temporary option? I'm worried and running out of time. -Steve |
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Dear Steve,
I know you are facing financial trouble right now; however payday loans are a very costly solution. Here’s how they work: let’s say you wrote a personal check for $330 to borrow $300 for up to 14 days. The lender would agree to hold the check until your next payday. At that time, the lender deposits the check, you redeem the check by paying the $330 in cash, or you roll-over the check by paying a fee to extend the loan. In this example, the annual percentage rate (APR) is 260.71 percent!
Instead, you might want to contact your creditors and ask them about a temporary hardship program. Many creditors offer such programs for people in your situation. Finally, I recommend researching any and all assistance offered by your city of residence. You may also get help from your local United Way.
The Advice Team |
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