Cambridge Credit: Payday Loans

Welcome to the Learn Now or Pay Later, financial
wellness series brought to you by Cambridge Credit Counseling. We’re hoping to provide you with a better
understanding of the financial challenges that confront you each day. Through education and advice, you can build
a strong financial future Cambridge can help. Donnie Moorhouse with Chris Viale, in the
subject being loans and Chris I’ve seen loans that allow you to borrow against future paychecks
that doesn’t seem like a good idea. No, it’s not at all Donnie; the fees associated
with these types of loans are outrageous. These loans carry interest rates of anywhere
from three to four hundred percent. Basically, how they work is you get a two
or four week term loan against a future paycheck so maybe a hundred, two hundred, three hundred
dollars to help with emergency you might have but generally the cycles of these from what
we see, is that consumers get into three, four, five, six of these loans and there’s
no way that they can pay these loans back when their paycheck comes in. So, you just keep advancing money to keep
up with that cycle. Are these types of loans regulated? They’re not regulated well enough, there’s
some new regulation that’s coming out now that hopefully can curb some of the abusive
practices in this payday lender industry. The only positive side of the payday lending
industry is that it’s based for unbankable consumers. Consumers that don’t have good credit or checking
accounts, they can use this as a tool to get immediate money to help with emergency. I’ve heard that you can apply for these loans
over the Internet as well? The ads you see on the internet, all of the
spam emails that come in make it seem like it’s very fast and easy money. The bottom line is the terms aren’t well defined,
the conditions aren’t well defined, so consumers don’t know what they get into and before they
know it they’ve got a thousand dollars, two thousand dollars out at three, four hundred
percent interest, there’s no way they can pay that back. Ok good, thank you Chris and thank you for
watching. To learn more about this topic or to receive
personalized advice from a certified credit counselor contact Cambridge today.

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