Loans – Austin
lending business has grown phenomenally in America, forcing lawmakers
to introduce new bills and laws to check abuse and malpractice
in that sector. People usually become chronic borrowers in order
to repay the first loan. Payday loans are also called as high-risk
loans, check advance loans, cash advance loans, deferred deposit
check loans and post dated check loans.
loans are increasingly popular with those who have an income below
$50,000 a year, the uneducated black community, the military and
those with a small but fixed income. The borrowers consider these
loans as a blessing but are hardly aware that payday loans
Austin are the costliest form of credit available. Many people
feel that a payday loan is an easy solution to temporary cash
flow problems. They usually do not have access to mainstream forms
of credit or are ignorant about alternatives to payday loans due
to ignorance. These loans have an extremely high APR or annual
percentage rates, a fact which the borrower is generally unaware
payday laws allow for a minimum tenure of 7 days and a maximum
tenure of 31 days for payday loans. The maximum balance that may
be owed by a borrower is $520 with a monthly fee of $10.For a
loan amount of $520 the permitted APR is 48% as per the payday
laws in Texas. Texas payday laws allow for loan renewals after
the first renewal if the loan balance declines with each repayment.
As per Texas payday laws, the maximum interest rate that may be
charged on small-term loans is 10% unless a licensed lender authorizes
lending business has grown phenomenally in the United States of
America especially in Texas. Payday loans with interest rates
as high as 570% APR were legalized in Texas in the year 2000.
It is said that payday loans can cost ten times as much as a small
loan taken from a bank.
payday lenders operate from federally chartered banks that are
based outside Texas. As per Texas payday laws, lenders can charge
152.9 % to 309 % APR on loans taken for 14 days. By using out-of-state
banks, lenders are able to charge annual percent rates in excess
of 1,000 % there by evading Texas payday laws and abusing the
borrowers. Nearly 1,000 payday loan outfits currently operate
statewide through partnerships with out-of-state banks. A borrower
ends up paying more on the interest and the fees than on the principle
a borrower was obtaining a loan of $200 to be repaid within 14
days, the maximum charge for this loan under Texas law would be
$13.73 which is equivalent to 178% APR. A survey conducted revealed
that several lenders charged $35 to $68 for the loan equivalent
to 450% to 880% APR.
loans are popular because within a few hours the loan can be obtained,
with no credit checks. In order to obtain the loan person needs
to produce proof of income and avalid bank account. It is the
fastest way to get emergency money in case of unprecedented shortage
of funds. Internet payday lending companies are popular because
of the discretion and the impersonal method of obtaining the loans.
borrower is usually ignorant of the fact that the lenders are
charging triple digit interest rates, that they can get ensnared
in a debt trap, rolling over the loan several times being unable
to repay the loan on time there by paying more on the fees and
interest than on the principle amount they had borrowed.
the loan term, payday lenders usually do not permit repayments
to be made in partial installment. For example if a person borrowed
$200 from a payday lender, he would have to repay the $200 plus
the fees at the end of the loan tenure, if he is unable to do
so the loan is extended with additional fees charged.
people are forced to borrow from another payday lender to repay
a loan. This traps them deeper, spiraling their debts.
borrower can work out a payment plan with his creditors, ensuring
the loan is repaid in time. Some employers grant paycheck advances
that are better than payday loans that have to repaid. There are
several consumer credit counselling agencies that help the borrower
to work out a repayment plan and develop a budget to repay the
loan. For more information about these services dial 1-800-388-2227
or visit the website www.debtadvice.org.
union loans are becoming popular as an alternate to payday loans
on account of their low interest rates. The North Carolina State
Employees Credit Union offers its members a salary advance loan
at 11.75% annual interest, which works out thirty times cheaper
than a typical payday loan. Some credit unions offer free financial
counselling and they also workout a savings plan to help members
get back on their feet. There are a few credit unions that offer
very low interest rate loans with quick approval in case of an
emergency. Unlike payday loans, credit union loan gives the borrower
a better chance to repay the loan with longer payback periods
and installment payments
card cash advances are offered at 30% APR, there by they are cheaper
than a payday loan.
finance companies offer short-term loans that usually have an
APR in the range of 25%-36%. These loans are also much cheaper
than payday loans. A person can borrow $1000 from a finance company
for a period of one year and pay less interest than for a loan
of $200 or $300 borrowed from a payday lender over the same period.
is also offered by http://www.consumersunion.org/ and http://www.aarp.org/
in case of abuse by the lenders.
who feel they have been abused by lenders by being charged too
much for a loan may register a consumer complaint with the Attorney
General's office by calling 1-800-621-0508 and requesting a complaint
form or downloading the form from the web site at www.oag.state.tx.us.
and relatives can be asked for help rather than taking a payday
loan. If a loan is obtained repay it within time, try not to extend
the loan, work out a budget to help repay the loan. Avoid borrowing
from a second payday lender to repay a loan. Consult a credit
counselling agency and work out a repayment plan.
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