MERIDIAN — The Better Business Bureau is cautioning employees furloughed because of the government shutdown to take care if considering a payday loan.
"Payday loans offer customers the opportunity to access cash quickly without being subjected to detailed credit checks; however they are charged very high interest rates," a BBB press release states. "While many borrowers believe they can
pay off the loans quickly, Better Business Bureau (BBB) warns that payday loans may have long-lasting and devastating effects."
"The most important thing is to understand the terms of the payday loan and make sure you are capable to pay the loan back." said John O'Hara
President/CEO of Better Business Bureau serving Mississippi. "Many times the interest rates are so high that customers find it hard to pay it all back quickly."
According to the BBB, a typical payday loan follows this type of pattern: a customer agrees to a loan for a few hundred dollars to be paid off in a few weeks.
"Bank account information is supplied to the lender and the money is promptly deposited," the press release states. "The consumer's subsequent payments go toward paying off recurring finance charges and never toward the principal. As a result, the customer can pay two and three times the amount of the original loan and still has the same amount of principal to pay off. Many customers find themselves worse off after experiencing this pattern."
The BBB advises those considering a payday loan to:
Look for the red flags. Unscrupulous online lenders often wave the same red flags, including not being forthcoming about their location or contact information. Also, be cautious of any lender that doesn't ask you for any background information outside of your bank account number.
? Research the lender with the BBB. Always check an online payday lender's Business Review before you hand over any bank account information. BBB Business Reviews are available for free online. They tell you how many complaints BBB has received, how the company responded to complaints and BBB's overall letter-grade rating.
Know regulations in Mississippi. Payday loans can be extremely expensive if you are unable to pay the loan off quickly, and in some states payday loans are unregulated.
Look thoroughly at the contract before signing. As with any business transaction, be sure to read all agreements, guarantees, and instructions before signing. Do not be pressured into signing an agreement before you are ready and you understand all terms and conditions. Make sure all oral promises are put in writing. Be wary of vaguely worded provisions, exclusions or limitations which could pose a problem later.
Never sign a contract with sections left blank.
