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Payday Loans Austin
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Payday Loans – Austin Payday 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. These 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 of. Texas 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 the loan.
Payday 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. Most 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 amount borrowed. If 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. Payday 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. The 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. During 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. Usually people are forced to borrow from another payday lender to repay a loan. This traps them deeper, spiraling their debts. The 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. Credit 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 Credit card cash advances are offered at 30% APR, there by they are cheaper than a payday loan. Several 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. Help is also offered by http://www.consumersunion.org/ and http://www.aarp.org/ in case of abuse by the lenders. Consumers 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. Friends 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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