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Watch Out for Payday Loan Collection Scams

Payday Loan CollectionOne of the things you can count on from a payday lender is that, if you don’t make good on your payday loan, they will do everything they can to collect. While most payday lenders operate within the law in this regard, there are some that have had controversial collections practices. Payday lenders, like many other creditors, will hound you severely until they get the money that you owe them.

Unfortunately, there are scam artists out there that will also pretend to be collecting for a payday lender (or for credit card companies or other types of credit, as well). In reality, they’re nothing but thieves trying to separate you from your money.

To avoid getting scammed by a collection agent or someone pretending to be a collection agent, here are some things you should know:

– Know your rights. Under federal law, there are things that collection agencies can and can’t do. They can’t make threats against you. They can’t pretend to represent someone they’re not. One collection company in Kansas is said to have pretended to be calling from the State Police. These practices are illegal.

– Use only legal payday loan services, like solidcashsolutions, Inc.

– Know who’s calling. Anyone trying to collect a debt from you has to identify the name of the company they’re calling from, as well as provide you with their street address. Don’t agree to talk to anyone who won’t provide you with this basic information.

– Know what you owe. Most of the time, when someone from a collection company calls, you know what it’s for. If the person on the other end of the phone is talking about debt that you don’t remember or aren’t aware of, they may be scamming you. A common tactic is to claim that you’ve bounced a check and then ask for checking account information to collect the money from the check.

– Know how to be safe. Don’t give out personally identifying information over the phone. Unless you’re 100 percent sure the caller is legitimate, you may be the target of identity theft.

– Know how to respond. You can report suspicion of scams to the Federal Trade Commission via their website. The same goes for legitimate collection agencies who don’t follow the laws regarding collection.…

Payday Loans Close Opportunity Gap

Payday loan businesses are often maligned. For someone just looking at the raw numbers (well, certain raw numbers, anyways) payday lenders might seem predatory. After all, interest rates in the hundreds of percents can’t be ethical, can they?

The fact of the matter is, though, that payday loans have fees that are comparable to other types of credit, in terms of their dollar costs. The big difference, of course, is that you pay back a payday loan in a period of weeks rather than over the course of months or years.

Payday loans also fill a specific need. If you don’t have a traditional bank, or if your credit isn’t sufficient to qualify for other types of loans, a payday lender can meet a specific need. It’s estimated that as many as 60 million Americans do their daily financial business in places outside of the traditional banking arena. Payday loans are one part of how they do business. Rent-to-own businesses are another example of how these folks handle their finances.

These folks, often known as the “unbanked” or “underbanked” have traditionally been ignored by the banking establishment. Still a 2005 federal law states that the FDIC is responsible for monitoring the situation with such people, and encouraging the banking system to bring those people into the fold.

This law isn’t new, however. The Community Reinvestment Act of 1977 was designed to help address the credit shortage for low and moderate income neighborhoods. While the CRA may have helped with things like housing, it didn’t address traditional banking services such as things like savings accounts, money orders, check cashing and affordable small loans.

As you can imagine, many underbanked and unbanked households are on the lower side of the income scale. Around 71 percent of unbanked households have incomes under $30,000 per year. This is a problem that payday lenders have stepped in to address. While critics may not care for their methods, they have found a business model that both meets their financial needs and provides access to money for the unbanked and underbanked.

The real challenge is that banks have traditionally shied away from offering short-term loans. In addition, some banks face regulations that require them to charge much smaller interest rates, making the kinds of short-term loans offered by payday loans unprofitable at best.…

Controversy Swirls Around Payday Loan Fees

Critics of payday loans are becoming increasingly vocal, and are making headway in many states. Unfortunately, as they get lawmakers to change laws, they’re limiting the choices available to consumers. Opponents of payday loans argue that payday loan fees are unreasonable, and that limiting what a payday lender can charge for fees is just a way to protect consumers.

This controversy is so active that the Federal Trade Commission feels the need to put up a warning about payday loans, along with some suggestions about how consumers can avoid using a payday loan service. While some of the advice makes sense, in some ways they’re missing the point about why people borrow on payday loans in the first place.

Among the alternatives offered by the FTC are:

1. Take a small loan from a loan company, bank or credit union. Unfortunately, many people whose credit record isn’t the greatest will have a hard time finding these kinds of loans.

2. Take a cash advance from a credit card. Of course, this type of loan will have a higher interest rate than other sources of funds, but it may still be less than a payday loan rate. In addition, because a credit card cash advance doesn’t require the customer to pay off the entire balance within a short time, the customer can wind up paying much more in interest because it will take longer for them to pay off the cash advance.

3. Shop around for the lowest-cost credit offer. This makes good sense for anyone. Even between payday loan vendors, rates can vary. Check the APR, the finance charge, loan fees and any other costs. Pick the offer available to you that has the best overall fee structure.

4. Talk to a consumer credit counseling service if you’re having issues with debt repayment. Most of the time, however, customers don’t take out payday loans to pay bills. They take out payday loans for more immediate needs, such as car repairs.

5. Make a realistic budget. This is also common sense. Know what your monthly and daily expenses are, and plan accordingly. Not spending above your means is important if you want to keep your debt under control. Here again, however, many consumers turn to payday loans for needs that can’t be predicted, such as catastrophic repairs to their vehicle or an insurance deductible after an accident.

6. Check into overdraft protection from your bank. Many banks will cover checks that overdraw your account, saving you fees from the place where you wrote the check. Unfortunately, the fee that a bank charges you to overdraw the account may actually be more than what it would have cost you to take out a payday loan.…

Will the Sun Set on Arizona Payday Loans?

In 2018, voters in Arizona were asked to vote on Proposition 200. Proposition 200 was designed to not only extend the laws that allowed payday lenders to exist in the state in the first place, but to also ease some of the restrictions placed on payday lenders by the government. The proposition was rejected by a solid majority of voters.

As it now stands, on July 1, 2020 payday lenders will no longer be able to operate in the state. The laws that allowed these businesses into the state are set to expire at that time, and opponents are working hard to make sure that there are no last-minute legislative changes.

What this means is that, among other things, payday lenders will have to conform to the state’s cap of 36 percent interest on loans. This cap is set by the state’s usury laws, and doesn’t apply to payday lenders.

Critics of the payday loan industry levy a variety of charges against them. For example, they claim that the payday lending industry is flooding Arizona with lobbyists who are trying to get the legislature to do something before the laws expire.

The critics also suggest that the rates charged by payday lenders are unreasonable. The fact of the matter is, however, that many consumers disagree. Because payday loans are typically paid off within a couple of weeks, the Annual Percentage Rate (APR) on these loans can be quite high while the actual fees and interest paid by the consumer aren’t as significant.

Critics also point to a coalition of business organizations, neighborhood leaders and faith-based groups that oppose payday lending. However, the businesses also have their advocates. There are a number of business groups that support the right of payday lenders to operate.

Part of the problem may be the way that Proposition 200 was designed. Instead of just extending the law that allowed payday lenders to come into existence, the proposition would have eased some of the restrictions that do already apply to the payday lenders. It’s possible that a measure seeking to merely renew the law that’s about to expire may have been able to muster enough votes to pass.

If the law expires, Arizona will be one of only a handful of states that have effectively banned payday lenders from their states. As of right now, only three other states ban payday lenders altogether.…

Online Payday Loan Scams Rampant

Money is tight all around these days. While there are some signs that the recession is ending, there are still plenty of folks feeling the hit. This situation, unfortunately, leads to customers taking unnecessary risks.

One of the ways that consumers deal with immediate financial needs is with payday loans. These short-term loans give the customer cash today and that usually needs to be paid back within a couple of weeks. These loans have a high interest rate, but because they’re paid off quickly the actual fee can be less than other alternatives.

There are even online payday lenders. These payday lenders don’t require you to visit a payday loan store, but will take care of the payday loan process entirely online. These loans are convenient, and usually no more expensive than payday loans taken out in person.

Unfortunately, this kind of payday loan also carries a risk. If a consumer doesn’t do their research or isn’t careful, they might fall for an online payday loan scam.

Rose Banks of Maryland found this out the hard way. She was in debt, way over her head and unable to make ends meet. Banks turned to the Internet to try to find someone to lend her the money she needed to stay afloat.

What Banks found, however, was something nefarious. She found an offer for a $5,000 loan through a company named “BRW Fin Group” The company said they were willing to offer her the loan, but that she needed to send in a deposit as a security.

Banks then wired $930 to a woman in Canada. Banks never got her loan.

This type of loan is known as an “advance fee loan,” and is illegal in many places. Customers all too often learn the hard way that, when you give someone money for an advance fee loan, there’s no way to guarantee that you’re going to get the money promised you.

One warning sign that you might be facing an Internet payday loan scam is that the lender doesn’t ask you for verifying information, such as permission to run a credit report or a copy of your paycheck stub. The Federal Trade Commission offers other advice to consumers about how to avoid these kinds of Internet payday loan scams, as well.

The good news is that there are plenty of legitimate Internet payday loan websites. You just need to be diligent about verifying the site before you enter your personal information, and never send an advance fee to a company who claims they’ll give you a loan.…

Death Knell of the Payday Loan Industry?

From the state of Illinois to Kimarnock, Virginia, politicians are posturing to try to put an end to the payday loan industry. Opponents argue that the businesses are predatory, and that they create more economic problems than what they solve. Consumers, however, don’t always agree with their politicians.

Take, for example, the aforementioned town of Kimarnock. Back in March, the town council voted to keep zoning laws in place that block the payday loan industry from expanding within the borders of that town. One of the town council members, Frank Tomlinson, led the charge against the payday loan businesses. “They loan to people who have their backs against the wall, and then they quite frankly stick it to ‘em,” Tomlinson was quoted as saying.

In that instance, many residents of the town supported the move to keep payday lenders out of the town. Statewide anti-poverty advocates from the organization Virginians Against Payday Lending even showed up to the town meeting.

A payday lender, Advance America, had hoped to set up shop in the town. They filed suit against the town, citing the idea of equal protection under the law. The town eventually reversed its decision, unwilling to face costly litigation to defend its zoning decisions in court.

It’s important to understand what a payday loan is if you want to understand the outcry. A payday loan lets a customer borrow against a future paycheck. In exchange, you pay a fee when you pay off the loan. Calculated as an annual rate in the same way that banks and other kinds of lenders do, this can be several hundred percent.

Opponents argue that this is usury, and that it takes advantage of people when they need it the most. However, there are those that believe otherwise. One federal study even suggests that payday loans have a positive overall effect on the borrowers and the local economy where those types of loans are permitted.

Payday loan businesses have been expanding quickly. In Virginia, for example, the Payday Loan Act of 2002 opened the way for the payday loan industry to do business. Today, the payday lending industry in Virginia is a $1.5 billion per year industry, featuring as many as 800 payday lending locations. These locations lend money to borrowers for emergency situations.

Many organizations, from the left-leaning AARP and AFL-CIO to right-leaning Family Foundation have come out against payday loan practices.

Still ,there is a strong and vocal group of people who are standing up for the rights of payday loan businesses, too. The fight isn’t over, and the industry may yet have life left in her to fight.…

Credit unions hope to join the highly competitive mortgage loan market. Although mortgage rates offered by these credit unions are not that inviting, they are aggressively campaigning their flexible terms and lower fees. In fact, some credit unions now offer loose membership rules that allow loans for people working for non-member labor unions or companies.

According to New York Times, Guy Cecala, publisher of Insider Mortgage Finance, said that credit unions are aggressively rolling out their assets on profitable ventures – lending is just one of them. Interest rates paid to member depositors remain low, and lending these assets to home buyers generates huge profits.

Credit unions would like to give their members an opportunity to own their dream house through first-mortgage lending. Unlike popular financing schemes, credit unions maintain equitable lending policies that support a healthy borrowing condition for both the union and the member. These lending policies likewise promote an advantageous mortgage portfolio for the credit union.

As a result, loans offered by credit unions provide attractive rates for both long-time and new members. Specifically, lower upfront fees minimize the borrowing costs shouldered by each borrower.

This has come out due to the continuing fallout from the credit crisis. Throughout the mid-1990 until mid-2010, first-mortgage terms offered by credit unions only accounted for 2 percent of the overall mortgage market. But in the recent years, credit unions have become more visible in the credit market, owing 4.5 percent of first-mortgage loans granted to borrowers.

Moreover, credit unions benefited from Wall Street’s suspension of its mortgage securitization policy which required investment banks to divert significant part of loans into securities. Credit unions held their loans on their own portfolio instead of selling them.
In the US State of New York, first-time mortgages granted by credit unions have jumped by 15 percent, said Richard Maxstadt of CUC Mortgage Corporation – an organization of credit unions with about 150 members across the New York state. This is a significant number considering the slow growth of the economy.
Although majority of the home loans follow 30-year fixed-rate mortgages, there are credit unions that now offer market specific loans, especially designed for borrowers.

Mortgage lending from credit unions across the country has enjoyed the same trend. In fact, a steady rise in the number of home loans has been obvious even since 2017.…