Payday loans and bankruptcy: Two things that go well together.
However, despite recent signs that the payday loan industry might be struggling and facing increased oversight from the government, it’s still very much alive and kicking and should continue to be.
With that in mind, here are 3 things you should know about payday lending:
1. There’s essentially no cap on interest rates by payday lenders. So if you take out a loan of $100 and pay $15 on it (a typical payday lending scenario), you’re paying 400% interest! To put things in perspective, 36% is about as high as a credit card interest rate could be.
2. Around 1,700 payday loan businesses went out of business this past year. Not a terribly stable industry as a whole. If they can’t manage their business so well, perhaps it’s not such a good idea to get involved with payday lenders.
3. However, as the subprime lending market dries up and banks continue to reduce the amount they lend, payday lenders will likely flourish since people will look to borrow from other sources. But that does not mean you should look to borrow from payday lenders. Unless you want to increase the likelihood of personal bankruptcy.
If you’re worried about paying your bills or making ends meet, before you take out another high-interest loan that puts you deeper in debt, it may be helpful to talk with an experienced Freedom Law Firm bankruptcy attorney.