Need quick cash before your next paycheck? You may be tempted to make use of the new payday loans that are available. All you have to do is write a check for the amount you want, and be willing to pay the money back at the low, low interest rate of 261%. That’s right, and 261% is estimated to be the lowest. According to Consumer Federation of America’s 1997 national check cashing survey check cashers are making payday loans at effective annual interest rates ranging from 261% to 1,820%. To put it simply, you could spend $2,600 a year to borrow $500. Even more alarming are the variations of the payday loan, such as handing over the titles to property in order to borrow money. Failing to pay the loans back in time could result in serious losses.
So don’t be blinded by the dazzle surrounding this opportunity. It certainly doesn’t pay off.
Resource: National Consumers League Community Credit Link, Volume 1 #3, "Payday Loans," p. 3.
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