Por Dena Beck, ex empleada
Jeremiah Luebbe, an attorney with Steffens Law Office in Broken Bow, Nebraska reached out to me to brainstorm a small business training session for the Center for Rural Affairs' REAP program. As we chatted, we discovered a mutual loathing for payday lending. Jeremiah gave us permission to use an article written by Steffens Law Office, P.C. on the topic, presented below.
Los préstamos rápidos son préstamos a corto plazo con intereses muy altos que perjudican gravemente a quienes no están al tanto de la situación y deben evitarse. El principal problema radica en la nefasta combinación de comisiones iniciales y tasas de interés muy elevadas, que suelen oscilar entre el 300 % y el 400 % anual.
Once a person takes out a payday loan, a vicious cycle begins. Unless the borrower receives a financial windfall, such as a tax refund, he or she needs a second payday loan, with yet another upfront fee, to pay off the first loan.
Typically, this cycle is repeated again and again. Each loan larger than the previous, until the debt load is overwhelming.
It should come as no surprise that these loans do more harm than good for a person’s credit rating. If the loan isn’t paid in full, a negative report on your credit rating is likely. Then, when a borrower goes to a bank for a more traditional loan, a large number of payday loans will show up on their credit report.
The banker views this information as strong evidence that they are overextended and living beyond their means. So, the payday loan borrower is passed over as a poor credit risk.
Finally, the continual stress that comes with living paycheck to paycheck, while attempting to pay off these loans is perhaps the main reason to avoid them. This type of heavy burden is very damaging to your health, oftentimes causing serious, potentially life threatening, ailments.
We urge you to consider other alternatives, such as a short-term loan from your bank or credit union, overdraft protection on your checking account, and, most importantly, living within a realistic monthly budget.
If you, or someone you know, has fallen into the payday loan trap, consider seeking assistance – the sooner the better. We would be happy to talk with you about preparing a plan to escape this nightmare.
For more information, contact Steffens Law Office, P.C., Broken Bow, NE, 308.872.8327, [email protected].
