Internet Payday Loans and Payday Companies
We have all been there at some point in our life. The point where we might need to borrow money. First and foremost I recommend that if you need to borrow money, swallow your pride and ask friends and family first. Money is a touchy subject, but if you are in a bind, the best thing to do is borrow from friends and family that you know and trust, and you know you will pay them back.
Now for the rest of us that do not have friends and family with money to lend, there are tons of storefront payday loan locales in your city. Always, Always, Always, read the fine print on everything that you sign. Especially when it comes to a store front payday center. Whatever the maxium that you can borrow, DON'T borrow the max. Take out a small payday loan if you really need it to see how it works and know that you can pay it off.
There are Internet payday loan companies out there in the web world. I have personally used a few of them. From my personal experience and what I have learned is what I am going to share with you today. First of all, most of the Internet payday loan lenders are illegal. Doesn't mean they can't operate because many are operating and loaning money and reaping the rewards from customers that did not read the fine print. The first thing that anybody should do when deciding on a Internet payday loan company is to see if they are legitimate. Verify that the company you are about to take a payday loan from is Authorized to do business in your state. Very few states have payday loan laws where the loan company is licensed in the state where they reside, then there license transfers over and allows them to do business in your state. Again very few states have this law/rule. Most states like mine require that any Internet payday loan company must first register and become license to operate such a business. The fees/interest charged on those loans also very from state to state. Internet payday loan companies will charge there own fees/interest which can add up big time. If you don't pay the loan back within 7 or 14 days, they may charge you another fee of any amount usually $50 or more dollars for each payday period you don't pay off the loan. With that example if you take 5 pay periods to pay off your original loan of $200, you have not only paid the $200 back in principal, but also 5 pay periods times $50, per payday fee which is $250. So that original $200 loan has now cost you $450. Again borrow from a friend or family member.
Also allot of people still fall behind on paying back a lender but know this:
Unless you really did intentionally defraud a company by fraudulently taking out a payday loan (using false info, etc) you cannot go to jail, be arrested, etc for a payday loan.
These places will try to scare you into paying up. They do this because they know there's no other way to collect legally on the debt, so they resort to illegal scare tactics to collect.
There are no debtors prisons. Can you imagine how crowded the corrections systems would be if everyone that owed money and had defaulted went to jail?
Know this - You cannot go to jail for not paying a payday loan debt. No police will be showing up at your work to arrest you. Your kids can't be taken away. These places are going to tell you the most awful things they can think of to scare the hell out of you and get you to pay.
If you want, you can call your local police department. Ask them if you can be arrested for defaulting on a payday loan. They will tell you no.
Now - In some states they do allow for bad check charges relating to payday loans. But - This is a check. They must have a physical check that bounced. This would mean it would have to be a storefront. And usually, as long as you keep up communication and stick to a payment plan, the storefront isn't going to do anything. __________________
Before you close your bank account due to payday loans eating away at your paycheck, please read this.
Some banks have a policy regarding ach transactions that allows them to force open closed accounts if any ach transactions go through within a certain time frame after the account is closed. This can leave you owing a legal bank $1,000's and reported to chexsystems, instead of owing barely legal (or not at all legal) payday loan companies. Not a good thing. Ask your bank what their policy is on ach transactions on closed accounts before you close the account. It's best to go in person and talk to a branch manager.
If your bank does have this policy, tell them your situation. Don't be embarrassed. Take letters with you showing that you have revoked authorization for each of your payday loan companies to debit your account. Tell the bank to put your account on deposit only, an ach block, or a hard hold before they close the account. Your bank can do one of those, don't take no for an answer. This will prevent any payday loan ach's from reopening the bank account.
It's always best to close your bank account. Leaving it open gives ways for the payday loan companies to continue to take money out. These companies have many different dba's(Doing Business As), so blocking them won't work. They will also produce paper checks and run them through your account. Closing the account is the best way to prevent these companies from taking money out of your account.
Some state laws do allow for prosecution if you close your bank account, but that is usually in cases of fraud. But it's always best to check with your state's attorney general or department of financial institution before you close your account. You want to make sure you are not causing more heartache
In my state the Dept. of Finance regulates pay day loans and there is a website for my state where I can look up the name of the company to see if they are authorized to do business also there is a toll free number for residents to call to speak to a person who will look up the company. I am not going to name the names of the companies that are illegal, but again check with your states website and dept of finance or call them and look up your payday loan laws. There are some legit companies licensed in every state.
I have a friend who took out two loans from two separate companies, and they started to take out extra money from his bank account, then started to threaten him with jail etc...etc. I did some research and found they were not legally authorized to do business. My friend did pay the original principal amount back, but he had to close his bank account to prevent this company from taking out any other funds. I also found out for him that the two companies he took internet payday loans out were actually the same company with two different websites.
File a Better Business Bureau complaint, contact the FTC, and contact your local state Attorney General if you use them and they are illegal and they are threatening you. I cannot stress that if you did take out a loan, you should pay back the original loan you borrowed. You do not legally have to pay it back if you did business with a company you were not aware was illegal. Moral reason, pay what you owe and in the future use friends and family, and of course budget and manage your finances better. At some point and time we all need help. Not everybody is born with a silver spoon in there mouth, and some have managed their finances to the point where they never need help.
So again, be aware of those companies that are illegal. Some companies are based outside the United States and allot are based on a Indian Reservation. The ones on Indian Reservations can be the worse ones. My friend dealt with those. They have there own laws and rules, but again they can't legally do anything to you.