Ah, one of my favorite topics: payday loans. Reuters is reporting that the payday lenders are making the housing crisis worse.
Some disturbing facts from the story:
- In one section of Cleveland, banks have been replaced by payday lenders;
- Ohio has more payday lenders than McDonalds, Burger King and Wendys locations COMBINED;
- The average borrower takes 2 years to pay off their “payday loan;”
Some states have 36 percent interest rate caps. Of course, in some states, like New York, that does not apply to internet loans. So, lenders use the internet to loan money from out of state.
The Federal Government has stepped in, but has only placed a cap for members of the military. California legislators are considering a cap as well.
For now, avoid a payday loan as long as possible. Borrow from friends and family. Check with your bank or credit union. Call anyone you know. You cannot do any worse than a payday loan.