Now and then, an anti-payday loan article will appear that falls back on the very same tired arguments. Take the Lansing State Journal article "Going with payday loans is probably not worth fees" as an example; it continues to bang the drum of 391 percent APR and regulatory variances. These points continue to be raised by payday loan-opponents, but they are proven inadequate when a a lot more detailed examination of the facts is undertaken.
Source for this article: Lansing Journal article shortchanges paydayloans factsIn Michigan, a payday loan isn't an annual loan
For consumer convenience, the Truth in Lending Act (a federal law) requires that all consumer loans - including the pay day loan - clearly advertise the annual percentage rate (APR) charged. This is easily applicable to a 12-month loan. However, while a payday loans no fax is a consumer loan, it is not an annual loan. Michigan has the type of two-week payday loans that calls for a $15 fee per $100 loaned, generally. Unless math fails, that's a 15 percent surcharge for the paydayloans service. The Journal reporter admits the pay day loans in Michigan ranges in term from as little as seven days to up to 31 depending upon the lender, although two weeks is standard. In what way is that standard an annual loan? Annually, it would be correct to say that it had a 391 percent APR. For a two-week payday loans no fax, $ 15 is 15 percent paid.Lender fees do vary
When the Lansing State Journal advises consumers to exercise caution, they're on the right track. Researching the best lender rates ahead of time makes sense and is advised by any pro-payday loan group worth its salt, such as the Community Financial Services Association. Charging $ 15 per $ 100 loaned is standard, but there could be some lenders who charge a lot more. It varies by lender, and regulations vary by state.
However, the example the Journal uses is suspect because of its lack of context. A customer named William Lee says that his $ 250 pay day loan required that he repay $ 400. There is no mention of whether Mr. Lee defaulted on his loan, perhaps because he borrowed a lot more than he could afford to repay. There is also no mention of any loan terms. Michigan Office of Financial and Insurance Regulation permits up to a $ 35.95 charge on a $ 250 payday loan transaction, so default or a bad lender are possibilities. Instead of supporting their arguments with facts, the Journal has merely grabbed a scare tactics page from the Center for Responsible Lending's playbook.Base your payday loan search on fact, not emotion
A payday loan can be a useful tool in the right situation. Shop around and do not borrow a lot more than you are able to comfortably repay on your following paycheck and there won't be any trouble. Impulsive action can lead to financial ruin, whether a consumer is looking for a payday loan, a mortgage, an auto loan or a host of other things. Research lenders online, make certain you understand fees charged before you apply and let the numbers do the talking. Being prepared will help you stay away from falling prey to the APR scare tactics the Lansing State Journal and Center for Responsible Lending continually use.