This is the Philadelphia Bankruptcy Attorney
Stephen Dunne and today we are going to discuss Payday Loans.
A Payday loan is a short-term loan where an consumer borrows a small amount at a very
high rate of interest. The consumer typically writes a post-dated personal check in the
amount they wish to borrow plus a fee in exchange for cash. The lender holds onto the check
and cashes it on the agreed upon date, usually the consumer’s next payday.
Payday lenders typically charge 369% interest on their payday loans. This high rate of interest
traps families in an endless cycle of debt. Payday lending is considered to be a scourge
by advocates for the poor and working class. They say the payday loans crush families by
trapping them in an endless cycle of debt at outrageous interest rates.
Payday lenders like to talk about payday loans as the equivalent of throwing a drowning man
a credit lifeline, but it’s more like throwing a drowning man a leaded anchor.
In Pennsylvania, a payday lender that does not possess a license from the Department
of Banking is limited to charging a consumer 6% annual simple interest on their payday
loan. The Pennsylvania Supreme Court ruled in Cash
America v. Pennsylvania Department of Banking that unlicensed consumer lenders are bound
by the 6% cap imposed by the Loan Interest and Protection Law.
Are you trapped with a high interest rate payday loan?
Follow these three steps and you may be able to find a little financial relief:
1. File a complaint with the Pennsylvania Department of Banking
2. File a complaint with the Pennsylvania State Attorney General’s Office
3. Contact a consumer attorney and ask for help.