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The Shaft: How Some Companies Prey on the Poor

The Shaft: How Some Companies Prey on the Poor Payday Loans The lending of payday loans or paycheck advance loans has been deemed to be loan sharking in 13 states. Here's how it works. If you have a job you can borrow against your next paycheck as a payday loan. Or government and You are short with your rent by $200. other guaranteed checks. If you can cover the check when it comes due, then you have paid off the loan with 30% interest. A payday lender will give you a 15 day $200 loan for a $60 fee. You must write a post dated check for the total. You now owe $260. You now owe $345. As the loan increases, your chances of paying it back decrease. If you can't cover the loan, it will roll over for another 14 day period and another $60 fee. There may also be a $25 fee if the check bounces. OPEN WE CASH ALL TAX CHECKS! tax CASH now After 6 months, you will owe $720 in fees plus the original $200. That's 360% interest. If you can't escape the cycle, what happens? The company can send it to a collections agency. Or you can be sued, property seized, or wages garnished if you end up on the wrong side of a court judgement. Some companies will even report you to the police for writing bad checks. Bank Bad Credit Cards OCREDI CA So if you have ever been in the previous situation, your credit rating is probably pretty bad. Not all credit cards are created equal. When seeking the convenience of plastic, know what you are signing up for. 1234 5678 123 NAME SURNAME 08/ People with bad credit will be offered two types of "repair" cards. You can get a secured card, which means you have to first pay $500 to have $500 in credit available. You can get an unsecured card for 'high risk' individuals. The typical starting limit is $250. That comes with a You are basically lending money to yourself, but... program fee of $95. And an annual fee of $48. There is also an annual fee, around $69. An account set up fee of $29. And an APR in the 20% range. And a $7 monthly service fee. And late payment and over limit fees around $30. So you get your new card in the mail with a $250 limit but it only has $71 available. Basically, you assume all the risks and are charged fees for doing so. Or to put it another way: you lend money to yourself, and if you don't pay yourself back, you get charged a fee by some company in Delaware. You gas up your car and buy a burrito and you are over your limit already. There is a $29 fee for that too. The next thing you know, the card that was supposed to help you build credit becomes a $200 dead weight. Rent-to-Own Some stuff isn't cheap, and it can be hard to pay upfront for a high cost item if credit is scarce and saving is difficult. Well there is a scam just for you. It's called rent-to-own. So you need to buy a mattress but they are too expensive, so you walk into a rent-to-own store. The store will buy a mattress for $500 and sell for $1.000 retail. You can purchase the mattress for $1,000 any time in the first 90 days. Since you can't afford that they will rent you the mattress for $19.95 per week. After that you are locked into the monthly contract which is 104 weeks, or 2 years. That's $2,075. You also have to pay sales tax on the higher price, so that's another $100 or so. And don't forget the insurance on your pricey mattress. It's $2 per week, or $208. If you rented a computer or other consumer electron- ics, it's likely obsolete and near worthless. After 2 years, your afford- able mattress is now $2,383. That's several times what it's currently worth. Don't worry if you can't come up with your payments. A rent-to-own store will give you a payday loan with a 531% APR. in Mint.com/blog WallStats.com

The Shaft: How Some Companies Prey on the Poor

shared by David on Mar 30
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Payday loans are a devious scheme perpetrated on the people most in need of real financial help. They are most insidious because they masquerade as a way out of debt, when in reality they are designed...

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