Seven Signs of a Predatory Payday Loan
• Repeated loan “flipping” through renewals, extensions, or back-to-back loans, charging more fees for no new money (the “debt trap”).
• Short minimum loan term, usually 2 weeks, which is not enough time for borrower to recover from emergency situation.
• Single balloon payment, instead of an installment plan that allows partial payments over time.
• Triple digit interest rate (usually over 400%).
• No consideration of borrower’s ability to repay.
• Using a check as collateral for the loan, lending to insufficient funds fees, bounced check fees and fear of criminal prosecution for “writing a bad check”.
• Mandatory arbitration clauses which eliminate the borrower’s right to sue. |
