Payday Loan Times

Donna Childs is the president and CEO of the Dayton Better Business Bureau. She wrote the following, paraphrased piece for The Dayton Daily News:

It’s hard to turn on the television or radio and not see or hear ads for Ohio payday loans. The business of payday loans is booming. Lenders offer different deals to compete for your business. And, they’re succeeding.

If you’re short on cash, payday loans, also known as cash advance loans, check advance loans or postdated loans, may seem like the answer. You walk into a store, pick up the phone or click on a link, provide some information and $100 to $500 is in your account before the day’s end. But, payday loans are one of the most expensive ways to borrow money and could throw you into a vicious cycle of borrowing and debt.

If you use a storefront payday lender, you write the lender a postdated check for the desired amount plus the loan fee. In return, you’re given the requested amount, minus the fee. At the determined time, the lender deposits the check, gives you the check back for the cash amount or extends the no faxing payday loan for another fee.

With Internet lenders, the loan amount is electronically deposited into your bank account. At the end of the loan period, the lender automatically withdraws the loan amount plus fees from your account.

Whether you use a storefront or Internet lender, you must provide information including your name, address and Social Security number. You must also show proof of employment and have a bank account in good standing.

Payday advance loan fees can range from $15 to $50 for every $100 borrowed. If you’re strapped for cash, paying $115 to borrow $100 for two weeks may not seem like a lot. But, the loan cost in terms of annual percentage rate is around 390 percent interest.

Payday loans can be deceptive. The lender may deposit your postdated check before the agreed upon date, causing your check to bounce and forcing you to pay more fees. Plus, the high rates can make it difficult to repay the original fast cash loan causing you to extend the loan.

Online lenders may be hard to locate and can make loans without complying with state regulations. Plus, completing online applications can expose you to privacy and security risks.

The Better Business Bureau suggests some alternatives to payday loans including getting a small loan from your bank, family or friends; asking creditors for more time to pay your bills and finding out what fees are associated with this service; making a realistic budget and sticking to it; or creating a debt repayment plan with a consumer credit counseling service