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3 Signs Your 'Loan' Is Really a Scam

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[This week is National Consumer Protection Week and so The ABC News Fixer is here to share tips all week long to help keep your money safe in some common financial situations. Check The ABC News Fixer homepage at ABCNews.com/Fixer for these and many, many more financial tips.]

What kind of crook would take money from a poor person?

In one of the most despicable – but unfortunately, common – scams, con artists are offering bogus loans to people with poor credit histories who need cash to pay their bills.

It’s called an “advance-fee loan” but it’s not a loan at all. It’s a scam.

These schemes can be quite sophisticated, using fancy websites, loan applications and even fake “loan officers” who are really just in on the scheme. After the scammers collect an upfront payment from the borrower, they disappear – leaving the consumer in even worse financial shape.

The ABC News Fixer has heard from numerous victims of this scam.

Make sure you don’t fall for it by noting these three red flags:

The supposed lender doesn’t seem to care about your credit history. The lender guarantees you’ll get a loan, no matter what. The lender claims that you’ve been approved for a loan, but then starts demanding fees upfront for vague reasons like “insurance,” “processing” or “paperwork.”

The

Federal Trade Commission

says a demand for any upfront fee is a clue to walk away.

If you need to borrow money, be sure to deal only with legitimate lenders that disclose all their fees clearly and conspicuously.

A legitimate lender will take its fees from the amount that you borrow – and not ask you to give them your own money in advance to get a loan.

If you have poor credit, you’ll have a hard time getting a legitimate loan. You’ll need to put in time and effort to rebuild your credit history. If you’re falling behind on your bills, contact your creditors to ask for help and consider getting assistance from a nonprofit credit counseling service.

– The ABC News Fixer

Got a consumer problem? The ABC News Fixer may be able to help. Click here to submit your problem online. Letters are edited for length and clarity.

[…]

What are some examples of a good time to take out a payday loan?

A:

Over the past 10-15 years, payday loans and payday lenders have become pariahs of the finance and credit worlds. Stories abound about the deleterious consequences of being caught in a payday loan “trap,” and many people will tell you that payday loans just do not pay. However, there are some circumstances when payday loans make sense as long as they are carefully considered and paid back responsibly.

Payday loan decisions are all about necessity and alternatives: do you need the cash, do you need it soon and do you have any superior options available to you? It is a good idea to assume that almost any other legal means of acquiring a loan is going to be relatively cheaper than a payday loan. Check with your bank, look at credit card issuers, and ask a relative or friend, etc.

Payday lenders almost always have effective interest rates that are extremely high. It is not uncommon to find a payday loan and, after annualizing the interest and fees, find out the money is being lent at 300% APR or more. Even though the interest may only accumulate for a short period of time, do some research to find the cheapest rates possible. Many payday loans are available online, so that is a good place to start. Just be careful about entering any personal information through payday loan websites.

Do not take out a payday loan if you cannot afford to pay it back quickly, such as in one month or less. Avoid loans that automatically roll over. If you get caught with the wrong loan, you may end up paying more in fees than you borrowed in the first place. The most obvious time a payday loan makes sense is when you are caught with a bill or financial need in between paychecks. Suppose you have a medical bill you would have been able to afford without a payday loan by the time your next paycheck rolls around, but you do not get paid again for two weeks. Taking out a $100 to $1,000 payday loan and immediately paying it off with your next paycheck may be the answer. As always, look to other options first.

If a payday loan is the only financing option that lets you fix your car so you can go to work or take your children to school, it might be worth considering. Chances are, you will not receive a credit card or a bank loan as quickly as a payday loan. Be sure you can pay off the loan quickly and check for competitive rates.

Unfortunately, most payday loans are not taken out with these guidelines in mind, and that is where you can get into trouble. According to a 2012 Pew survey, only 16% of payday loans were taken out for unexpected emergencies. More than 80% of borrowers said they could have cut back on expenses instead of taking the loan. Avoid these mistakes because the costs of continued payday loan use are almost never worth it.

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Payday Loans Online No Credit Check – MusicWordMedia.net

Payday Loans Online No Credit Check | Get Payday Loans Online With No Credit Check

Posted by :musicwordm On : September 28, 2014

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Category: Payday Loans Videos

[…]

VIDEO: HBO's John Oliver Goes After PayDay Loans | Bank Innovation

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John Oliver has taken on some controversial topics on his new HBO show, Last Week Tonight. This time, he and Sarah Silverman take on payday loans.

Payday loans have been a hotly debated topic, with many saying that payday lenders are just loan sharks that take advantage of those looking for loans. The U.S. industry is a $27 billion business, but with interest rates charging 1,900% or more for these loans, lenders are using regulatory loopholes to make repaying harder for those less fortunate and get them stuck in a cycle of borrowing.

Here was Oliver’s take: “Basically, payday loans are the Lay’s potato chips of finance. You can’t just have one. And they’re terrible for you.”

Sarah Silverman came on to show Last Week Tonight’s “commercial” for its ideal payday lender, a company called “Anything Else.”

Check out the video below:

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WJTV INVESTIGATES: Payday Loan Company Allegedly Trapping Customers In Debt

Payday loans and cash advances may sound like a good idea when you’re strapped for cash, but if you’re not careful, they could land you in a world financial trouble. It’s no secret that payday loans are known for their extraordinarily high interest rates.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” /?>

It’s become such a problem that payday loan businesses have been outlawed in 18 states. Currently, the Consumer Federation of America lists the 32 other states, including Mississippi, where high cost payday lending is legal.

According to Mississippi code, payday Lenders can loan up to $500.00 per check, with a term of 30 days, at $20.00-$22.00 in finance charges per $100.00 borrowed.

The finance charge is the same for short-term, 14-day loans, however the APR on those loans is 500 times the original amount of the loan.

Jerry Wilson, Commissioner of the Mississippi Department of Banking and Consumer Finance says that the Payday industry is quote “pretty good about following the law.”

However recent complaints have sparked an investigation by the department into one payday company in particular, All American Check Cashing Inc., which has 51 locations statewide.

It’s prompted the DBCF to order a cease and desist order against All American’s Monthly Lending Program for illegal and unethical practice, alleging the program instructs employees to only accept the interest on a delayed deposit check and further telling employees to illegally roll a check during the middle of each month.

The DBCF claims that All American has been holding the checks of customers who could not pay off their loan debt by the deadline, having them sign up to pay an additional fee, only to later cash their original check.

Tameka Fletcher has used payday loans before to get her through a tight spot, and recalls her own experience with payday lending businesses. She said, “I paid the money along with my interest and got back the next day and realized that they had already cashed a check that I wrote them two weeks before, and I had paid them when I came in to pay it.”

According to the cease and desist order, All American’s monthly lending program focuses on customers who “only receive one income payment per month. This includes those customers receiving one payment (on the 1st or 3rd of each month) from a government benefit program such as Social Security, Medicaid, etc.”

So what does All American Check Cashing have to say about this?

Owner Michael Gray could not be reached for comment, but according to Commissioner Jerry Wilson, his examiners were denied access to All American’s customer files and business records for two days when they asked for them- something Wilson says is unheard of and totally against the law.

We also reached out to Dale Danks Jr., The attorney representing All American, who declined to talk to us, but is quoted in the Clarion Ledger saying, “All American has a policy against accepting a fee only, so if the investigation proves that this was occurring in some locations, All American will do whatever it needs to do to correct that issue.”

If All American Check Cashing Inc. is found to be in violation of the Mississippi Check Cashers Act, the company could lose its license or face a fine.

As for consumers, State Attorney General Jim Hood says people should first try taking out a small loan at a bank. However, the problem still remains, most people that use payday loans don’t have good enough credit to qualify for a small bank loan in the first place.

Attorney General Hood says, “Unfortunately, this industry is working on the poor folks that can’t afford to go to those types of institutions.”

So perhaps the message here is to just say no to Payday loans.

[…]

Courts ‘fair’

Courts is hitting back against a claim that its “instant cash” loan offer is less attractive than it seems.

Trisha Tannis, managing director of Unicomer (Barbados) Ltd, which trades as Courts Barbados Ltd, insisted that the “Courts Ready Cash” offer rate is the lowest on the market, in response to an accusation that the company was charging customers too high an interest rate.

Through the programme, Courts’ “loyal” customers were sent cheques valued at between $500 to $1 000 redeemable in cash. The interest rate is 2.4 per cent with equal monthly payments of $191 for six months.

However, Grady Clarke, chief executive officer of Caribbean Credit Bureau Ltd, better known as Credi-Check, said the effective interest rate of the Courts loan worked out at close to 50 per cent.

“Based on my calculations,” said Clarke of the $191 for six months, “this amounts to a total of $1 146 being paid, and when you subtract the $1 000 principle, you are left with $146. If this represents the interest income that is charged on the loan over a six-month period, and the fact that the average balance of the $1 000 loan repaid in equal instalments over six months is $500, the effective interest rate works out to be close to 50 per cent.

“How many customers would actually know the true cost of borrowing?” Clarke said. He added that “customers have a right to repay the funds and have the loan cancelled if they were not aware of the cost”.

Please read the full story in today’s SUNDAY SUN, or in the eNATION edition. […]

No Credit Check Payday Loans – Next Payday Review

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Next Payday Loans No Credit Check

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No Credit Check Payday Loans – Next Payday Review

Price: Up to $1000

Get the highest qualified payday loan with no credit check at the lowest rates around. It’s almost as good as your boss paying your wages early!

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3 User reviews

4_5stars

Editors rating

Get the highest qualified payday loan with no credit check at the lowest rates around. It’s almost as good as your boss paying your wages early!

Reliable no credit check payday loans of up to $1000 Cover rent, emergency car repairs or anything else that can’t wait until payday Cash advances with peace of mind. Money you NEED, when you need it, no fuss, no stress.

NextPaydayLoans.com understand that anyone can have a bad week. They know the last thing you need on top of the stress of finding an extra $1000 is the worry a poor credit history can cause. It takes a few minutes to apply securely online, and with instant approval you can rest easy knowing the money you need to see you through the month will be there ASAP. Their payday cash advances are designed to be paid back as quickly as possible, so that you do not have outstanding debt. Their low-rate cash advances offer a fast solution to unforeseen expenses, without lingering stress.

Our review team scored Next Payday Loans as “outstanding” in several key areas, include their approval process and customer service. Here’s what they had to say: “Next Payday’s online approval process is really convenient for me, I can apply during my morning break and in many cases, the cash has been transferred to my account by the time I leave work in the evening, so I’ve been able to get gas and groceries on the way home”,”…poor credit payday loans with a really low APR!”, “..because ths company doesn’t credit check, I can relax a bit, my credit record isn’t great which is why I use no credit check payday loans in the first place. Knowing that Next Payday Loans will lend to me without nosing into my history makes me feel comfortable turning to them”. One of our review team was late in meeting his repayment with Next Payday and praised how this was handled by their customer service team: “I rang and told them my check was delayed. Customer service were sympathetic and handled it smoothly, and I was able to make my repayment a few days later”.

In conclusion, Next Payday provides a fast and comprehensive service, that offers instant no credit check loans that their customers find extremely useful and return to time and again.

Conclusion Rating

Next Payday

4 stars

[…]

New payday lending bill moving in AL legislature | Times Free Press

By PHILLIP RAWLS

Associated Press

MONTGOMERY, Ala. — After years of killing bills to tighten regulations on payday loans, the legislature may agree to set up a database to make sure people don’t take out more than $500 in loans at one time.

The House Financial Services Committee voted unanimously today to approve a bill that would set up the statewide database of payday loans in the Alabama Banking Department. Businesses would have to enter information in the database each time they got ready to issue a loan. If someone already had $500 in loans, the business could not issue one exceeding that.

The bill’s sponsor, Democratic Rep. Patricia Todd of Birmingham, said Alabama has had a $500 limit, but there was no way to enforce it without a central database. She said people would go to multiple lenders and take out more than $500 in loans, trapping them in a cycle of high-interest debt.

“This will at least keep people from having multiple $500 loans,” she said.

Todd’s bill now goes to the House. She said she is optimistic about its chances because she worked out a compromise with the industry and had bipartisan support in developing the compromise.

Payday loans are short-term loans, usually for 14 to 30 days with annual interest rates that can hit 456 percent. Payday lenders say they serve a market that banks don’t want to serve, and the costs are cheaper than bouncing a check.

Todd and others have tried for several years to pass bills lowering the interest rates with no success. The bill she introduced at the start of the legislative session stalled in the Financial Services Committee, where six of the nine members had received campaign contributions from the industry or an associated political action committee. The amount ranged from $1,000 to $3,900.

Once Todd dropped the interest rate cap and focused on the database, her bill breezed through Wednesday with bipartisan support.

Gov. Robert Bentley’s Banking Department tried to use its regulatory authority to set up a database last year. The industry sued and got the database put on hold pending a trial in June. Todd’s bill would negate the lawsuit and get a database operating by early 2015.

Herb Winches, lobbyist for the 13 Check Depot stores in the Birmingham area, said the family-owned business wants to make sure small lenders have the same access as big lenders. If that is done, he said Check Depot is fine with the legislation.

“It’s going to become law, so you don’t have any choice,” he said.

Anna Pritchett, advocacy director for AARP Alabama, said the bill doesn’t do as much as the organization for older citizens wanted, but “any forward motion is good.”

Todd said she would like to give the database two years to work and then come back with additional regulatory legislation.

Todd’s bill does not affect title loans on vehicles.

[…]

Check Cashing & Payday Loan Services in the US Industry Market Research Report Now Available from IBISWorld

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Growth experienced during the recession will be hindered by increasing regulations.

New York, NY (PRWEB) February 19, 2014

The Check Cashing and Payday Loan Services industry accounts for nearly a quarter of financial services spending by underbanked consumers. Frozen lending markets caused by the recession expanded the underbanked client pool for industry operators, as a growing number of individuals were unable to access traditional financial product offerings. As such, the industry is predominately countercyclical in nature, with rising unemployment and poverty rates benefiting demand levels substantially. Rather than default on debts, poor or recently laid-off consumers chose to turn to the industry’s unsecured loan products during and subsequent to the recession. Consequently, revenue for the Check Cashing and Payday Loan Services industry is expected to increase at an annualized rate of 2.0% from 2009 to 2014 to reach $11.1 billion; this growth includes a 2.2% rise in revenue expected in 2014 alone.

According to The Pew Charitable Trusts, 5.5% of domestic adults have used a payday loan. In general, younger individuals that lack a college degree and generate less than $40,000 in annual income are the most likely to rely on payday loans. The average borrower takes out eight loans of $375 each and pays $520 in interest annually. Moreover, this average borrower is typically indebted for five months out of the year.

According to IBISWorld Industry Analyst Stephen Hoopes, “Given the industry’s reliance on poorer consumers for revenue, regulatory agencies have sought to increase legislation surrounding industry operators, as they view payday loans and check cashing fees as exploitative.” As such, 15 states currently either ban payday loans or cap the annual percentage rate at 36.0%. Furthermore, as national interest rate cap proposals are forecast to intensify, compliance costs are expected to increase, to the detriment of profit margins.

Over the five years to 2019, industry revenue is forecast to increase at a more subdued annualized rate. “Despite rising employment levels, the number of consumers that are structurally unemployed or in poverty is anticipated to remain elevated,” says Hoopes. Moreover, competition from commercial banks that offer similar short-term, high-interest products is expected to fall, given recent decisions by Wells Fargo and US Bank to discontinue these offerings. Yet, external competition is still expected to rise, largely in the form of companies that offer industry products exclusively online. In addition, expected increases in regulation are anticipated to force some industry operators to move geographic locations or close down entirely.

For more information, visit IBISWorld’s Check Cashing and Payday Loan Services industry in the US industry report page.

Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld.

Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189.

IBISWorld industry Report Key Topics

The Check Cashing and Payday Loan Services industry cashes checks, drafts or money orders for the general public. Companies in this industry may also offer payday loans, installment loans and other financial services. Banks and firms that operate exclusively online are excluded.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.


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