There are many reasons people go to high risk, short term lenders. Sometimes it is the only place to get the money. Sometimes they dont have a bank account or dont have access to other money. But do you know why the interest rate is so high?
The interest rate is reflective, at least in part, of the lender’s ability to be repaid. Most people taking out these short term loans are less likely to pay the money back. So how do these lenders get their money?
For the most part, without the protection of the Fair Debt Collection Practices Act, FDCPA, high risk lenders are free to use more aggressive collection techniques. For example, they may try contacting coworkers or third parties to obtain information on the borrower. They may also not advise borrowers of the right to have a debt validated or other protections available to a borrower. A high risk lender may call your employer or take other adverse actions.
This is just one more reason to avoid these high risk, short term, high interest rate loans. If you take out one of these loans and you are having problems paying it back, talk to an attorney about your situation.