Preferred Financial Services gives a brief overview of payday loans and the different money options consumers have….
Preferred Financial Services gives a brief overview of payday loans and the different money options consumers have….
Andover, Massachusetts June 11th 2010— The ongoing economic troubles of America have forced many consumers to run up debt just to pay the basic bills each month. Americans continue to fear job loss and for those that have lost their jobs over the past couple of years the finance options available to them are very limited. Before the recession hit, Americans had many cheap ways of getting credit when needed with little to no background or income checks. This obviously helped Americans live a comfortable lifestyle while also helping the economy grow at a historically fast pace for much of the first decade of the 21st century. However, this easy money also created a false sense of entitlement and security which quickly vanished as the economy and particularly the job market headed south.
As a result of the recession many Americans turned to Payday loan establishments which offer quick and easy to get credit to desperate Americans who cant afford to pay their bills. While it has helped some stay afloat it has also dragged many deeper into debt with no way out. Payday loan operations have been around for a long time but have only recently faced scrutiny for their very lucrative business model. Payday loan centers provide a quick and easy way for consumers to get money with a promise to pay it back once they get their next pay check. It is very easy and efficient with money being exchanged within a few hours. Obviously this is much easier than with a traditional bank or credit union and thus it has always been beneficial to some consumers. However, as the economy tanked more and more people started using these lenders because they could not afford their basic bills while waiting for their paychecks. Although they were able to pay their bills each month, many were not able to pay off the loan in full by the due date because the money from the paycheck had to be used for other bills. This domino affect continued until consumers literally owed more interest than principal.
Typical interest rates on payday loans vary between 15 and 25% but add up really quickly because this is not an APR, but instead the rate for the duration of the loan, typically whenever the next pay period is. So, a $1,000 loan for a month would cost the consumer $1,250 at the end of the month at a 25% interest rate.
Due to these incredibly high interest rates Preferred Financial Services discourages most consumers from getting payday loans as it is very easy to fall behind on the payments if the loans are not repaid in full by the first due date. Instead, we recommend looking for alternatives that are less costly. If it is a one time thing, family loans or a friend who can loan you some money are both great ways to get through a tough situation without paying exorbitant interest rates. If expenses can be cut or income can be increased payday loans should be avoidable completely as the real issue consumers should be focused on is their financial situation. If you are forced to get a payday loan, clearly your budget is out of whack and you are spending more money than you should. For many Americans this spending includes credit card debt, something we are experts at eliminating.
Are you currently in the process of paying back a payday loan? Or do you have some nightmare payday loan stories that you would like to share so the next American wont fall into a similar trap?
Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past seven years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.
For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .
Contact:
Stephan Tavernini
