Unfortunately, the cost of living has increased drastically over the years, leaving many in an unfavorable financial situation. As a result, an unexpected medical bill or car repair can create extreme financial stress. In response to this, some lenders have started offering payday loans, which are short-term loans until your next paycheck. While this may seem like a good idea, it can create issues down the line. Keep reading to learn more about this practice and how an Arroyo Grande consumer lawyer can help.
What Is a Payday Loan?
When unexpected bills arise, but someone does not have money in their checking account to cover the cost, it can be a stressful situation. However, some creditors offer what are known as payday loans. These allow the borrower to receive a cash loan to pay off any bills until they receive their paycheck. The creditors will set the borrower’s next payday as the date they must repay the loan.
Unfortunately, the vast majority of payday loans are not paid off in time. As a result, the borrower can fall deeper into debt, as many of these loans have an APR of 400%-600%.
Are Payday Loans Legitimate?
Though some payday lenders can be predatory, they are often legitimate. However, there are instances where these loans can result in scams. When you apply for a payday loan, many third-party application websites do not send the form directly to a lender. Instead, they sell the information to any creditor who may look for those in need of payday loans. However, many times scammers will purchase your information and use it against you.
Unfortunately, if someone gets a hold of this information, they may use it to say they’re trying to collect on a debt you owe. This can occur even if you have never taken out a payday loan.
Similarly, scammers may call pretending to be a creditor, and they may ask for a deposit or down payment to send the loan. A legitimate lender, even those who offer payday loans, will never ask for a down payment to send the money you are applying for.
What Should I Do if I’m Being Harassed?
If you are being harassed by a creditor in reference to a payday loan that you owe money on, you should not accept the intimidation or abuse. Even consumers who are in debt are entitled to protection under the Fair Debt Collection Practices Act, meaning you do not have to suffer abuse.
When you are facing harassment for a payday loan, Loker Law can help. Our attorneys will do everything possible to help you achieve the best possible outcome for your situation. Contact us today to learn more about how we can help you through this tough time.