Be aware that while payday loans are easy to get quickly, they come with a big cost. If you are not careful, you will find that instead of helping you get past a difficult financial time, they can wind up sinking you further into debt to the point where you may not be able to recover.
If you are struggling with unmanageable debts in Ohio, there is help available. The seasoned Columbus, Ohio, bankruptcy lawyers at Fesenmyer Law Offices, LLC provide free initial consultations for people throughout the Columbus area who have gotten into financial difficulty. We will examine your individual situation and find the best way to guide you to debt relief. Contact us by email or call 614-228-4435.
What Are Payday Loans?
Payday loans, also known as paycheck advances, are typically loans for relatively small sums, approximately $1,000 or less. People taking them usually hope to be able to repay the loan in days or weeks, often when they get their next paycheck.
The advantage of payday loans is that, compared to a conventional loan, which take hours to fill out applications and days before you can get the money, payday loans don’t require much paperwork, and you get the money you need quickly. No one will run a credit check or require proof of who you are, what your salary is, or how you intend to spend the money. You can get the loan even if you have a poor credit rating, and you’re not likely to be turned down.
Downside of Payday Loans
If the idea of payday loans sounds good to you so far, take a moment to look at the disadvantages. Because of all the drawbacks, the Consumer Financial Protection Bureau (CFPB) is looking into establishing regulations for the industry. Also, the state of Ohio attempted to protect consumers from outrageously high interest rates of payday loans by passing the Short-Term Lender Law (STLA) regulating interest rates and prohibiting lenders from giving out loans on the internet or on the phone. Unfortunately, payday lenders found ways to get around these consumer protections by creating Credit Service Organizations, a kind of payday loan broker that adds high fees for “helping” the consumer find the loan.
There is no cap on the fee that the Credit Service Organization may charge. Your promissory note will describe the fee as a “prepaid finance charge,” which is added to the total interest you pay on the loan.
As a result, you no longer have the protections that Ohio lawmakers intended you to have. Many Ohio debtors wind up overburdened with payday loan debt, including unreasonable interest and other penalties that can pile up quickly.
The following are also disadvantages of payday loans:
- The cost: The CFBP notes that the finance charge for these loans is often between $10 and $30 for every $100 borrowed. If you borrow $500, that $30 charge becomes $150 in a very short time.
- High interest rates: A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%. One web site which matches applicants to a large network of more than 100 lenders, states that APRs may be between: 22.9% and 1304%, depending on the amount of your loan, cost of the loan, term of the loan, and repayment amounts and timing. For small amounts and shorter terms, you will have to pay the higher end of the APR range.
- Collection Methods: If you can’t pay off your loan on time, the loan company will put the pressure on, including making harassing calls to your workplace or your family members. In addition, your lender may:
- Charge you late fees
- Send your account to a collection agency
- Report your information to a consumer reporting agency, which may negatively affect your credit score
- Offer to extend your loan at additional fees, charges and interest
Columbus-Area Payday Loan Providers
While a payday loan may seem like the only source of quick cash in an emergency, they should never be considered as anything other than a very short-term fix, not a long-term financial solution. The following site lists many of the companies that give payday loans in Columbus, Ohio.
https://www.samedaypayday.com/paydayloanincity.php?state=OH&city=Columbus
Alternatives to Payday Loans
Options you may wish to consider instead of taking out a payday loan:
- Borrow from a friend or relative, or ask your employer for an advance on your paycheck.
- Contact creditors to discuss your situation and ask for more time to pay or an alternative payment schedule.
- Get a more conventional loan, such as from a community-development credit union.
- Get assistance from local social service agencies for food, heating, and housing expenses.
- Consider filing for bankruptcy. Chapter 7 or Chapter 13 bankruptcy is a way to eliminate debt and get a fresh start on the road to financial recovery. Once you file, the automatic stay provisions will prohibit many creditors and payday lenders from taking collection actions against you. When your bankruptcy discharge is complete, you will be free of debts owed to unscrupulous lenders.
Contact Us For Help
If you find yourself drowning in debt and being harassed because you are unable to make payments, take the first step toward getting your life back on track by contacting the experienced and compassionate debt-relief attorneys at Fesenmyer Law Offices, LLC today for a FREE INITIAL CONSULTATION.
We know what you are going through. We will evaluate your entire financial picture by looking at your income, your debts and your goals, and we will discuss the best fit for your individual situation. We will handle every phase of the process and find what works best for you.
We have helped thousands of Ohio residents find new hope.
Delaying can only make your situation worse, so call the Ohio bankruptcy attorneys at Fesenmyer Law Offices, LLC today at 614-228-4435, or email for your free consultation.
