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

Every year about 12 million Americans depend on payday loans to handle income fluctuations or cope with unforeseen emergencies. Nonetheless, while payday loans are used to address a very real problem, fraudulent payday lenders still harass consumers. It is not unusual to read horror stories about people paid in excess of 1000 percent APR or caught in debt traps because of poor oversight and lack of better options.

Once a person is trapped with endless rollovers and hidden fees in a downward debt spiral, they can easily see their credit harmed and bank accounts drained, especially if they take a loan from a particularly unscrupulous lender. Payday loan strategies such as hidden fees, rollovers and unreasonably high interest rates have led 22 states in the United States to limit or prohibit payday loans entirely.

Simply many people have no other choice. For someone impacted by low salaries, income fluctuations or an unforeseen disaster, a payday loan could be the only way to bridge their income shortfall. Although it may not address the financial difficulties of an individual in full, it does provide a temporary solution.

Unfortunately, more than 80 per cent of payday loans are 'rolling over' into a new loan or the borrower takes out another loan directly after paying off their old loan. If a lender has no policies in place to avoid rollovers, and provides no flexible repayment options, the financial disaster becomes an inevitable reality for most borrowers.

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

infographic by: www.lendup.com

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