Beware of Payday Loan Pitfalls
Now that the holidays are over, more people are turning to payday loans to help make rent or buy food for their families.
And with the numbers on the rise, the Consumer Fraud Task Force is warning consumers about payday loan pitfalls.
Judy Mills says the open sign on payday loan companies can sometimes be an open trap to a revolving door of debt.
“It can sometimes be up to 900% that can be charged on there,” Mills says. “The sad thing is that people get caught up and take out another loan to pay off the first one. It begins to snowball.”
The President of the Southwest Missouri Better Business Bureau says that’s when the problems start.
“Payday loans can fulfill a needed purpose, but you got to be sure if you take one out, you got to be able to pay it off when the payday comes,” Mills says.
A quick look in the phonebook and you’ll find 60 listings for payday loans scattered all across Springfield.
And across the state of Missouri there are more payday loans than there are McDonalds.
Mills says nearly three dozen payday loan locations in Springfield have complaints filed against them.
Complaints or not, Mills says before you head to one of the locations, here are some things to think about.
Check with your local bank to see if it offers short term loans.
If you’re having trouble paying your bills, contact your creditors as soon as possible and ask for more time.
If you do take out a payday loan, read the agreement thoroughly and know exactly when it’s due.
Mills says she thinks payday loan companies are more open now about their interest rates than they used to be, but it’s always better to do your homework first.
“As we’ve always said, if it sounds too good to be true, it probably is,” Mills states.
Some states have passed laws to put a cap on the amount of interest a person can owe on payday loans.
Missouri is not one of those states, but a coalition out of Kansas City is trying to put an initiative petition on the 2012 statewide ballot.
Complaints can be filed on the Better Business Bureau’s website.
You can also call the Attorney General’s office.
Article source: http://www.kspr.com/news/local/kspr-beware-of-payday-loan-pitfalls-20120105,0,3134342.story
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