Payday loans are the devil
I didn’t realize how many people really use payday loans until I stumbled across the Debt Consolidation Care forums. I don’t know much about the affiliated debt counseling service, yesdebtfree.org, but from what I can tell from the internet facade, they are are on the up-and-up. It seems like nearly all the forum members, though, are drowning in payday loans (called “PDLs” in internet shorthand). Before I ran across the forums, I also did not know about the prevalence of internet payday loan web sites.
Let’s take a look at one of them, PayDayOne. The front page, as you can see, advertises “low rates” with pictures of their friendly employees who obviously just want to help you succeed. How will they help you succeed? By lending you very small sums to “cover unexpected expenses or pay bills.”
And how fast will the interest on that “low rate” loan accumulate. Read the fine print: “$1 per day per $100 which is equivalent to an APR of 365%.” Wait, 365%?!? Yup.
So even assuming there are no late fees for not paying in full by payday, a $100 loan will cost $365/year, plus you have to pay back that $100. Um, yeah. Good deal. Payday loans make credit cards look like a wise spending decision. After all, most credit cards have an APR in the teens. Or maybe around 30%. Which is a steal compared to a payday loan.
So what is the solution to unexpected expenses? A savings account with a few hundred dollars in it, saved bit by bit by cutting unnecessary spending. Or, barring that, a credit card. Payday loans are like buying a one-way ticket to insurmountable debt. Buyer beware, indeed!
Hi! I found your site a couple weeks ago, and enjoy your writing.
Just a quick note on PDLs- when my first kiddo was born, we had some unexpected expenses (well, should have been expected expenses but weren’t) and we didn’t have any savings. I didn’t have a credit card because I had screwed up my credit in college.
At physical payday loan places like CheckNGo and Moneytree, it is ridiculously easy to get a payday loan for up to $700 depending on your income. I lived in a large Navy town, so these things were everywhere. I was going to bounce a check, so i figured that paying $15 for a $100 loan was better than bouncing 3 things for a $75-$100 fee. So I got that. I was only 4 days from payday, so I payed 15% for a 4 day loan (over 1000% apr). But it gets even better. Couple weeks later, car breaks down. Need to fix it but no cash? no problem - money tree for $500. Hey, it’s only a $75 fee for 2 weeks right?
After 2 weeks, rent is due, but so is the moneytree.. solution? Pay off the money tree loan with cash, get another one to pay the rent.
So enters the never ending cycle. They offer a way to make your loan into a payment plan - all you have to do is pay the fee on the balance of what you owe (so if I wanted to make my 500 loan into a payment plan, all it costs is $75) over 3 or 4 weeks. But they don’t exactly advertise that (and why would they?)
I am always distrustful of companies that exist solely on the misfortune of consumers, like payday loan places. I think they serve a good purpose if you didn’t balance your checkbook right and would rather pay a $15 fee than 4 overdrafts at $35 a pop. But the type of people who most often use these are people who don’t save and can’t afford to pay $50 every two weeks to keep their loan continuing. this is one industry that professes to help those who just need a little bit to get to payday, but completely exploit them.
People who charge 300% interest on a loan are usually called loan sharks. Unless there are special state laws exempting payday loan places. Sorry for the rant :)
Yeah, I think that’s the main problem. It looks okay once, but then it becomes an option. And once a PDL becomes a first resort, you’re hooked, and you’re screwed.
Mr Glover,
You are correct in saying that Payday Loans (PDL’s) are the devil! When you make the decision to get one you may as well go ahead and make a deal with Satan and get it over with. Thank God though there are sites like consolidationcare.com to educate. I like to think of that site as being God’s way of countering Satan:-). Not desiring to waste any of your time I will now get to the point of my writting to you. I got some PDL’s and there is one company in particular that I am having trouble with. The company goes by the name of Global Financial Services (GFS or GFSIL) and from the info that I have been able to obtain they are based out of Reno, NV. I reside in NC. I do now know that they are illegal in my state and I have spoken with the Attorney General’s office, David Evers, to be specific who told me to contact a Consumer Lawyer and gave me the Lawyer Referral number however, I have been unsucessful in my attempts to get through which brings me to you. My problem is that I have asked this company on several occasions both verbal and written not to contact my place of employment. Needless to say, they have ignored my request and when they call they leave voicemails with threats of fraud and Jail both of which I know are idle threats but upsetting just the same. I attempted to make payment arrangements just for them to call me anyway and tell me they have no record of the arrangement. I have kept documentation as well as a couple voicemails to prove my point. If I answer the phone and tell them not to call and hang up they just call back repeatedly until I answer again. I counted 7 times on Friday 11/17/06. David said that I should sue them being that I have proof that they are violating my rights. What do you think? Do you think that I would have a case. I regret that I got in this mess but sometimes we just can’t control some things but noone should have endure abuse no matter what the circumstances that is why there are laws to protect us. Do you think that you can help me or at least point me in the right direction. I don’t want anyone else to have to go through this and I feel that if maybe I can show at least one of these companies that their rogue collection practices will not be tolerated then just maybe someone else out here will not have to go through this and possibly lose their job because of collectors relentless practices. Please help.
Thanks,
Sonya
Hi Sonya. I don’t give out specific advice through this blog, and particularly not in public comments. If you want to call or e-mail me privately so that we can go over the particulars of your situation, I may be able to point you in the right direction, at least.
Even better, because I know there are North Carolina laws on payday lenders that may affect your claim–and I operate from Minnesota, so I am not familiar with those laws other than in passing–you should look for a consumer attorney in North Carolina. Regular referral services are generally useless for this, I find. However, you may find the NACA Member Database quite a bit more helpful.
If you still can’t find a lawyer that way, give me a call or shoot me an e-mail, and I may be able to point you to a specific lawyer who can help you.
Mr. Glover,
First, I would like to thank you for taking the time to respond and for supplying the link to the NACA Memeber database that may be able to aid me in my search for an attorney in North Carolina. As you suggested, I will first seek an attorney in North Carolina and if I have problems then I will contact you by either email or phone. I do realize that by you not being my attorney and not being familiar with the laws in my state, you will not be able to give me legal advice. I will assure you that if in the future I contact you I will not consider it legal advice but simply put, your personal opinion of what the next steps should be. Again, thank you for your time.
Sincerely,
Sonya
You are all so right! I am nervous because I too have a loan with GFSIL…nice acronym….they never even gave me a name of their company or where they are….A “small” advance to get you through to payday becomes months of “fees” because you can’t pay the loan back. They know you don’t have any extra money or credit (or you wouldn’t be using them) and they take advantage of that by charging exorbinate fees and continue to keep you in the downhill cycle until you crash and burn! Who can afford to pay fees each month with or without paying down the principle and getting rid of the loan over so many weeks? And they are not helpful after you get the loan - I get paid twice a month and that payday changes, sometimes Friday and sometimes Monday, and they don’t care, they take my fees out the Friday before I get paid which causes me NSF charges also, and THEY DON’T CARE!! I called and requested the day changed, faxed all the information that they requested, and they didn’t change the date! Oh well, nothing I can do about it! I am currently looking into my sister trying to get a small loan to get me out of this trouble. HOW EMBARRASSING! And I didn’t tell anyone in my family about this for months, and now my sister is helping me, which I don’t like either! I told her that I felt so stupid, and she said that the only thing that this stupid is to let it continue! So, try to find a way out, because it is a vicious cycle. I told my sister that it is like holding several hundred dollars in your hand and burning it. And you do it each payday! Hemmoraging money! Good luck to you all. I will never use them again. I would rather go hungry and homeless….
GFSIL is a scam well known on the internet!! You owe them nothing! Don’t pay a dime. Report this activity to your state attorney general and the FTC as quickly as possible and get your bank to deny them any further access to your account due to fraud. Get paperwork and FTC complaints to prove to your banks they are a scam operation and your NSF charges will likely be refunded to you.
In spring of 2006 I received a loan from this company GFS and tried several times to make arrangements to pay them in full. Everytime I would contact someone to pay this loan off I was informed that my loan was already extended and would take affect the following due date. Well the following due date would arrive and I noticed the extentsion amount would be deducted from my checking account and not full payment. This continued for months to the point where I was not being able to pay my other bills b\c of my payroll check being direct deposit. Well I was forced to change banks (which I have been with for several years) change my direct deposit. Now my bank of almost 8 years or more I owe almost 3x the amount of my original loan due to NSF they have charged my from GFS continuing to try to deduct funds from my account. My bank was unable to close my account because of the continued ACH from my checking.
I am now being called at home, cell, and my office several times a day from a different number every time. I have received several threating voicemails at my office and at home con concerning this. They have made threats to contact my employer directly and come to my residence. I dont know much about laws in my state, if anyone knows of the laws in Florida please help with advice.
Thanks,
Nick
I to have a gfsil loan and they have been harrassing me at work. I work for a hospital and it has been sent to my manager, risk management, and security and they continue to call. I saw previous writing about filing a complaint and giving it to the bank. What is an ftc and where do I file a complaint. If anybody has been able to do something useful against this company or start a class action lawsuit i would love to join
@summer & Nick: Find an attorney in your state using http://www.naca.net. Most, if not all consumer lawyers will give you a free consultation over the phone or in their office, and they will help you understand what rights you may have and what you might be able to do.
@summer: The FTC is the Federal Trade Commission. You should be able to find out how to file a complaint with them by going to their website, http://www.ftc.gov.