It doesn’t surprise anyone to read a story about crack downs on fast payday loans both brick ‘n mortar and online. What might come as a shock is that your neighborhood bank is now the focus of the latest short-term loan crack down. As of November 21, banks and credit unions have had regulators in their short-term loan business practices.
Banks and credit unions will now have to disclose the APR associated with fast cash loans. Prior to this they had been getting away without having to disclose the staggering figure. By calling the loan charges ‘fees’ they were able to skirt discussing APR. These lenders will now have to offer this information to their customers. Customers think that they are getting a different kind of loan as compared to a regular short-term payday loan online. Besides a few more regulations for the payday lender to conform to, the actual loan is very similar – quick cash at a high price.
Bank lobbyists defended their loans by comparing them to organized crime. Before payday loan companies started, people went to loan sharks often funded by organized crime. The rates were still high if not higher when you think about some of the collection methods used ‘back in the day’. Rightfully so, these loans are better than what was, but not necessarily better than what is.
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Low cost payday loan lenders make loans more cost effective. When finding these lenders whether online or through a bank, it is important to understand the terms and conditions. If you are even the slightest bit worried about whether or not you will be able to afford the full payoff in just a few short weeks, it is important to know what kinds of consequences you are facing. This will be where the payday lending companies will differ from most from banks and credit unions. When you have a payday loan payoff scheduled by your own bank, there is direct access to your money the instant a deposit is made. A direct lender has indirect access to your account balance. The payment must be scheduled. If you call your lender prior to the scheduled date, you may be able to change the date or work out another type of payment option. Banks are less apt to offer an alternative payment offer but will wait for your deposit. If the deposit comes late, there is a good chance that there will be a late fee withdrawn in conjunction with it.
This latest news only enforces the need to shop for the perfect lender. Don’t just look at interest or APR. Check out business practices and loan terms and conditions. It is also good to inquire about collection policies just in case something does go awry. We all experience emergencies so don’t think that the will never be any when you have a payoff in two weeks or so. How much would it cost to roll the loan over or would you have to take out a new loan and stat the process over with new fees?
One thing is for sure, having too many direct payday loans out at one time will mostly likely destroy any chance you have at paying the debt off on time. If you cannot pay in full, at least pay as much as you can to bring the principle balance down.
