The 6 Most Common Pitfalls of Payday Loans, and How to Avoid Them #infographic

The 6 Most Common Pitfalls of Payday Loans, and How to Avoid Them #infographic

About 12 million Americans rely on payday loans each year to handle income fluctuations and cope with unforeseen emergencies. Although payday loans are used to deal with a very real problem, fraudulent payday lenders also exploit clients. Reading horror stories about individuals paid over 1000 percent APR or caught in debt traps is not uncommon because of minimal oversight and lack of better choices.

Once a person is trapped in a downward debt spiral with constant rollovers and hidden charges, they can easily see their credit ruined and bank accounts drained, especially if they take a loan from a particularly unscrupulous lender. Payday loan tactics such as hidden charges, rollovers, and unreasonably high interest rates have led 22 nations in the U.S. to limit or ban payday loans entirely.

For many people, there is literally no other option. For someone affected by low wages, fluctuations in earnings, or an unforeseen crisis, a payday loan may be the only way to bridge their income shortfall. Even though it may not fully solve a person's financial problems, it offers a temporary solution.

Unfortunately, more than 80% of payday loans will roll over to a fresh loan or the lender will take out another loan directly after paying off their old loan. The economic catastrophe becomes an inevitable reality for most lenders if a lender has no measures in place to prevent rollovers and provides no versatile options to repayment.

The 6 Most Common Pitfalls of Payday Loans, and How to Avoid Them #infographic

infographic by: www.lendup.com

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