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I recently finished adding state by state payday loan laws to my companies website, and as I was adding all 50 states I realized that they really do not matter when it comes to online payday loans.
What do I mean?
Well, state by state the laws very from completely illegal to pretty much open season on customers, depending on the state, but with online companies all bets are off.
These companies either do not follow the laws set out by each state or the completely ignore them. Since these companies are set up much different than their brick and mortar counter parts, it makes it real easy for them to work under the radar.
What makes them different?
The first difference is, if you are unsatisfied with the online company, where do you go to complain? How do you even find the company? Good questions with not too many answers. To understand this more lets look at the two and compare them.
Brick and mortar
Brick and mortar companies must follow the state laws as they have physical address and can be held accountable. You usually post date a check or set up an automatic withdrawal as your payments and if you have any issues can go to their office and talk to someone.
When the payment is due the process is taken care of as a payment in full unless you contact them ahead of time and let them know you want to change the arrangement. Say you want to roll over the loan, if allowed in your state and just pay the interest, you arrange this before the due date and all is well, besides you getting raped by fees and interest.
Online payday loans
With online loan companies the opposite is the norm, and can lead to huge payday loan debt in no time. When your payment is due with these online companies UNLESS you contact them within 3 days of your due date they will take out the interest and usually about a $45.00 fee. So, you will be left with the original loan amount you started out with, plus, you will have payed on a say 2 week $300.00 loan about $120.00 interest plus a $45.00 fee. Add it up, you still owe the $465.00 original payback figure plus you just paid them $165.00. Nice little racket they have going here for a now one month loan.
Anything else?
Oh yes, there is more. You pretty much can not dispute anything with these online companies, nor can you stop payments from going out from your account because your bank simply will not guarantee they can stop these guys from making withdrawals.
Long story short, avoid these companies at all costs, and if you are already trapped by them get hold of a good payday loan debt consolidation company asap, you are going to need them!
I hope this article on state payday loan laws helps you make an informed decision on whether or not to use these companies, hopefully not!
Please feel free to share this article and leave any questions and comments below!
Yikes! Complicated stuff that seems designed create more problems in droves.
Thank you for discussing the disadvantages of using online loan companies for payday loans. Payday loans are generally not a good idea in the first place because you need to pay them quickly, and they charge very high interest on their loans.
I hope you're able to get the word out to more people before they get tangled up with these companies. Good work
Love the fact that you have made you way around the country and now the online one is covered, too! Thanks for the great work.
The problem with the Banks holding onto funds until it is released to the respective payee, is claimed to be time for administrative pocessing. This is another money spin for the Banks to hold onto a payment, that generates them some nice easy interest. Thanks for the Article Shawn, it is interesting.
You made your way around all the states great going Shawn I hope people are getting your message and getting away from pay day loan debt!
I've seen lives, marriages, families ruined, even death stemming from money issues using this insidious option. This is NOT an option. Do NOT support these dastardly companies and let's do our very best to systematically put them out of business!
Got similar outfits here in the UK. Some people are getting into real difficulties with them and now one leading(?) company is saying they intend to hand over details of 'bad' customers to a third party collection agency. A very frightening thought, but legal!
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