Payday Loans Massive Fees and Other Terrible Things
The consumer financial protection bureau commission a study of more than 300 pay day loan lenders and what they found is more proof of how terrible these loans are.
In addition to the high interest borrowers pay for pay day loans, lenders require borrowers to agree to direct debit payments known as ACH payments which result in $185.00 in fees for lack of sufficient funds. We all dread and know the NSF fee wich stands fro Not Sufficient Funds. Banks can charge as much as $34 per instance. The CFPB found that a significant portion of pay day loan borrowers pay close to $200 in NSF fees.
“After analyzing 18 months of data on more than 330 online lenders, we have found that borrowers face steep, hidden costs to their online loans in the form of unanticipated bank penalty fees,” said CFPB head, Richard Cordray.
If you have read this website before then you know how much I detest payday loans. These loans prey on the very poor and lock borrowers in cycles of perpetual debt. A few hundred dollars borrowed results in over $1,000.00 in payment that my clients cannot explain how they got there. This industry profits off the unsophistication of some borrowers who simply allow the ACH monthly payments to go on until the lender decides it is enough.
I am glad the CFPB is keeping up the heat by letting consumers and regulators know how terrible these loans are.