Payday loans and bank loans: Who is the real villain?

Payday loans have recently been dissatisfied because some people believe that high interest rates and predatory lending practices are horrendous, but when the payday loans and their costs are compared to the traditional bank fees, another villain emerges. .

The average cost of short-term personal loans provided by most payday lenders is $12 to $22 per 100 US dollars. from

[Simple interest rate is 12%-22%] from

 The payback period is usually two to four weeks, and payments are automatically deducted from the same personal bank account where the funds were deposited at the time of the loan. Those who oppose payday loans believe that if the percentage ratio of one of the loans is amortized over a period of one year, the annual percentage ratio [APR] may reach or exceed 200%. Of course, the 200% real interest rate seems to be horrendous, but it also raises the question: “Why do people who object to payday loans [or anyone involved] add annual interest rates to only two to four? On the loan for the week?" When answering this question, we began to see the true self-service purpose of the villain.

Most groups that strongly oppose short-term personal loans and payday lenders who provide these loans are made up of large banks and other traditional lenders. They claim that they oppose payday loans to protect American consumers. In fact, if we look at the typical scenes involving these so-called “protectors,” a different story will emerge.

For example, suppose a consumer with an average bank checking account has a cash shortage and needs an additional $200 to pay a few small bills or buy food for their family until the next payday.

The possibility of obtaining loans from banks in less than 24 hours is small, even trivial, especially if the credits owed to consumers in need are not as good as perfect credit. Without the option of a fast payday loan, consumers may be forced to continue to invoice those bills because they know that there is not enough money in the bank to pay for the bills. The overdraft fee for most banks is about $35 per bad check, and once the next deposit is automatically deducted from the consumer account. If you deposit the money after the end of the billing month, you may increase the other late fees – further increasing the bank's arrears!

Now let's say that consumers have to write three small-sized overdraft checks for a total of $100 to pay for these bills. The $35 fee is the cost of each check, so if the consumer writes 3 overdraft checks for a total of $100, The bank will charge the consumer a fee of $105 or $35 per bad check. from

[Simple interest rate is 105%] from

 If we like the bank to spread the amount to the annual interest rate – when the bank opposes the payday lender, the interest rate of the overdraft bank exceeds 1000% per year, after which the late payment fee is added.

To make matters worse, in this hypothetical bank account overdraft, it is most likely to charge a fee of $20 to $45 to three sellers who write bad checks, so the cost of not being able to get a payday loan is even higher. In addition, in most states, deliberately issuing bad cheques is illegal and can be punished. Although large corporate banks and their lobbyists may wish you to believe, when we look at the real world objectively, it becomes clear that payday lenders actually provide valuable service standard banks for medium and low-income consumers. Limited options for the account.

American consumers need payday lenders. If a payday loan is not needed and it is not a viable solution to the existing problem, then the business will not thrive across the country. “Traditional banking institutions simply don’t provide the flexibility and short-term cash loans to distribute like a payday lender… So the industry actually fills the gap for many Americans – most Americans use the service wisely, effectively William Janus, owner of three payday loan stores in Missouri, said.

The arguments for and against payday loans are expected to continue to grow in the coming year, and at the forefront of opposition to payday loans are likely to be villains who pretend to be bank governors who believe that the payday loan industry has eaten up Rich profit margins are conveniently hidden in overdrafts and late fees. They have been charging these high fees in the name of "protecting" American consumers.

To protect yourself, make sure you know all the bank fees you may have to pay and whether they will increase or increase due to late fees and increased interest. By searching for "Best Online Payday Loan Comments" on the Internet, you can find better business bureau or Federal Trade Commission complaints for payday lenders.

Source by Christian T. Rogers

Leave a Reply