Advice and tips on payday loans payment arrangement

These small loans, also called "cash advance loans," "check advance loans," or "deferred deposit check loans," are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. With rates so high and the term of the loan so short there's no wonder that a very high percentage of these loans are rolled over by the borrower again and again so that the accumulated fees equal an effective annualized interest rate of 390% to 780% APR depending on the number of times the principal is rolled over.

Frequently, payday lenders require borrowers to provide a post-dated check for the balance of the loan plus finance charges, which the lender will negotiate on the loan's due date. If you have provided your payday lender with a post-dated check, probably the easiest way to prevent the lender from negotiating the check is to place a stop payment on the check with your bank. In order to place a stop payment, you would need to provide the bank with the check number, the amount of the check, and the name of the company to whom the check is made payable. Before placing a stop payment on your check, you should consult with your banker to discuss any possible problems stopping payment on the check may cause you. In addition, you should keep in mind that some payday lenders use electronic debits rather than physical checks, and it may be more difficult to stop these electronic debits. The definitive way to stop any further checks or electronic debits from being processed would be to close your bank account and open a new one with a new account number. Your banker should be able to advise you one what you need to do to keep this company from accessing your bank account, and if closing your current account is appropriate given the situation.

Even if you are able to stop the payday lender from debiting your bank account, you will still owe them money, so you will need to formulate a plan to address these outstanding loans. You can get out of this trap if you are a resident of one of the twelve states where this type of loan is illegal once the effective rate passes the usury cap in that state. Usury laws dictate the maximum interest that many lenders may legally charge. If the payday lenders follow their normal business model the loan will most assuredly pass the limit very early. New York State even has a criminal statute that sanctions the lender if the rate exceeds 25%. If you are in one of those states, the loan may be void, and you may be only liable for the principal amount borrowed. In addition, there are eight states whose payday loan regulating statutes require lenders to set up an installment repayment plan if an account reaches the maximum number of rollovers allowed by law and the debtor declares that he/she is unable to pay the balance due. Such a repayment plan may help you in paying off these loans. You can find a summary of your state's pay day loan statutes at www.paydayloaninfo.org a website developed by the Consumer Federation of America. If you go to the same site and click on consumer help, you will find a comprehensive discussion of the best strategies of how to cope with and get out of the payday loan trap.

If you do not live in one of the states whose payday loan regulations favor consumers, the best solution would be for you to borrow the funds needed to repay these loans from a conventional lender or a family member or friend. Converting your payday loans to a conventional loan should allow you to repay the loans within a reasonable time frame and at a reasonable interest rate. If you cannot borrow the funds to repay the payday loans, you may want to make a payment each month to pay down the balances. In some states, the interest on the loans will prevent you from effectively repaying the debts in monthly installments; if you find that to be the case, you should contact the payday lender to try to work out repayment terms that will work with your budget. Hopefully, one of these options will help you resolve your outstanding payday loans.

Bills.com also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in California, Florida, Illinois, Massachusetts, Missouri, New York, Texas, and Virginia.

If you do not repay a payday loan, the payday loan company has several legal remedies, including wage garnishment, levy, and lien. See the Bills.com resource Collections Advice to learn more about the rights of creditors and debtors.

I wish you the best of luck in repaying these payday loans. I hope this information helps you Find. Learn. Save.

Best,

Bill

www.Bills.com