Payday loans are advance loans that are secured by a personal check that is held until your next payday. For example, if you borrow $100.00 for 14 days, the payday lender might ask you for a personal check in the amount of $115.00. The lender will then hold that check for 14 days until your next payday. This means that the initial finance charge is $15.00. This might seem reasonable if you pay the loan back at the end of the borrowing period. In this case it appears that the finance charge is 15 percent. However, when calculating the annual percentage rate (APR), the interest rate is actually 391 percent.

Here’s how that works:

The daily interest is 1.0714 percent. (15 percent divided by 14 days) The annual percentage rate is 391.06. (1.0714 percent multiplied by 365 days) Pay day loans companies are counting on you to roll over that $100.00 loan a few times because each time you do, in this example, they make $15.00 every 14 days. It’s easy money for them and expensive money for you.

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pay day loans question

Pay Day loans help

Unfortunately, there are very few ways to get help in paying off pay day loans. There are no programs, to our knowledge, that negotiate or settle pay day loans unless those pay day loans have been sold off to a third party debt collector. The reason for this is that pay day lenders typically do not lower their interest rates and do not negotiate with settlement companies or credit counselors.

When done correctly, most debt relief programs involve a consolidation of all your unsecured debts through credit counseling. Presumably, the lower monthly payments will then leave you enough funds in your budget to pay towards your pay day loans on your own.

You always have the option to consult an attorney to see if the pay day lender has complied with all truth in lending requirements. Be wary of companies claiming to stop harassing phone calls from pay day loans collectors or claiming to stop the high interest fees from adding up. The fact is that no debt relief company has any more of an advantage than any other debt relief company. You are far safer sticking with the recognized companies in the debt solutions industry with proven track records and good ratings with Better Business Bureau.

Tips for finding reputable debt relief online:

Look carefully at the websites you browse, searching for the corporate identity of the company you are applying with. If you cannot easily find the name of the company on the front page of the website and only see the name of the URL, chances are good that you are dealing with a lead generator who is going to sell your application to multiple parties. Look at the privacy policy of the website to see if it contains any statements regarding what it will be doing with your application. Some privacy policies contain a lot of writing but really don’t reveal anything.

What you should be looking for in the privacy policy:

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