Are you upset over the interest rate on your credit card or car loan? Well, take solace in realizing that it could always be much worse. Imagine being on the hook for a loan with a 780 percent interest rate.
Two weeks ago, the owner of a national payday lending enterprise was indicted on federal racketeering, fraud and conspiracy charges. The 75-year-old man and his multiple payday loan businesses made almost $700 million from 2008 to 2013. Hundreds of thousands of desperate borrowers were duped by businesses with enticing names, such as Instant Cash USA and Easy Cash.
These payday loan companies charged borrowers $30 for every $100 borrowed, an annual interest rate of 780 percent. Keep in mind that due to the short-term nature of these loans (a matter of weeks), $30 for every $100 can cause the balance to swell many times over when borrowers are unable to make payments.
To make matters worse for borrowers, the owner of these payday loan chains used lenders found on Native American reservations to bypass consumer protection laws and avoid lawsuits.
Payday Lenders Target the Poor and Desperate
Payday loans target the poor or people who are too cash strapped for other reasons to make it to their next paycheck. In other words, these payday lenders target people who are financially vulnerable. For some borrowers, signing a sheet of paper and leaving a seedy strip mall with $200 seems like a better option than going hungry or defaulting on other bills.
No matter what the circumstances may be, payday loans are not worth the trouble! These loans are difficult to pay off, and payday lenders have a history of ignoring consumer protection laws.
The Kansas City bankruptcy attorneys at The Sader Law Firm can help people trapped by excessive debt restart their finances.