Pay Day Loans

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Pay Day Loans
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Buyer Beware..

• Get cash until payday!
• You can get 50 to 500 within 15 minutes?
• Get cash.100 or more.fast!

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• Payday loans are relatively simple and easy to
  get, especially if you only need the money for a
  short time.

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What are they?

• Check cashers, finance companies and others who
  make small, short-term loans.
• AKA payday loans, cash advance loans,
• check advance loans, post dated check
• loans or deferred deposit check loans.

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Loan agreement

• READ THE CONTRACT!
• You are legally obligated to repay the loan
• If you cannot repay the loan, the lender can seek
  a money judgment against you

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Truth in Lending Law

• The loan agreement must include
• THE AMOUNT FINANCED (THIS IS THE CASH YOU WILL
  RECEIVE)
• THE FINANCE CHARGE THE DOLLAR AMOUNT THE CREDIT
  WILL COST
• THE APR
• TOTAL PAYMENTS AMOUNT YOU WILL HAVE PAID AFTER
  YOU HAVE MADE PAYMENTS AS SCHEDULED.

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You do the math..

• You borrow 100.
• They charge 18.
• Your payment is due in 2 weeks.
• What is the percentage charged for two weeks?

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Interest for two weeks..

• 18

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What is the APR?

• 18 for a 2 week loan
• 52 weeks in a year
• 18 x 26 ?

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APR ..

• 468

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Compare Cost on a 10 week loan

• Cost to borrow 200
• At 12 APR..4.60
• At 36 APR..36.00
• At 500 APR191.78

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Story of a payday loan

• You need (or want) 500.NOW!
• You know you will get paid soon (2 weeks)
• So you write a personal check for 575, postdated
  for your payday

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• You give your postdated check to Pay Day lender.
  They give you 500.
• On payday, the lender cashes your check.

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• The true cost to borrow 500 for the two weeks
• APR 392

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• Potential situation on payday, you are now
  short by 575, so you might need another loan

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Alternatives to Payday Loans

• Shop carefully for credit compare APR
• Consider a small borrowing from credit union
• Contact creditors for more time to pay bills
• Make a realistic budget

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The final word.

• Payday loans costly cash