Payday Loans and Advance Loan Scams
Posted By: Dr. Frugal in Loans on 06/27/2007 at 09:45:32
You need some cash now buy payday is a week away. You write a check for $375 to the payday loan company. They immediately write you a check for $300 and hold your check until next payday. Surprise! They keep that $75 as the fee: a ridiculous 25% interest rate for a TWO-WEEK loan. And the APR for that· That's right, over 500%. SCAM SCAM SCAM.
Advance loans are really no different in terms of being a scam but slightly different in how the money comes to you. They guarantee approval for a loan for ANY credit but require you to pay a fee before you apply. Most legitimate lenders won't guarantee ANYTHING until they've thoroughly reviewed your application and your credit history. Advance fee loans, big shocker here, are illegal. You'll never see the money. They'll simply collect your application fee. There are similar credit card scams--you pay a fee to apply for the card and then guess what, you never get a card. If you're not sure something is a scheme check out the FTC website to find out or look at one of the many consumer watchdog groups to find out for sure.
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