Lobo Strongview Episode 2 – The Dangers of Payday Loans

Join us for our second episode of Lobo Strongview. Today, professionals from Austin Bank give advice on the dangers of payday loans and why they should be avoided.

Hi i’m megan hodgkins and i’m with austin bank as a loan assistant today i’m going to speak to you on the dangers of payday loans payday loans you might also know them as cash advance loans payday loans get their name because they usually come due on your next payday and today we’re going to go over how they work and the dangers of them payday loans usually

Go by the smaller loan amounts they usually range between 100 up to 500 dollars some places will go a little bit higher but 500 is usually the most and our average payday loan is about 375 dollars and they have shorter terms than your normal bank loans um you usually will have to pay back your next payday loan by your next there is no installment unlike a

Bank loan which your bank loans usually are up to a 12 month installment payday loans there is none they carry a very high interest rate there is no credit check and there is an automatic repayment in easy renewals so on a high interest rate let’s take an example if you borrow four hundred dollars you’re gonna pay about sixty dollars in fees so let’s break it

Down with that sixty dollars in fees you’re going to times that by the 365 days in the year you divide that by the 14 days in the two weeks let’s say you take that for where i got the 14 days is that’s the two weeks in between your paydays and you divide that out you get 3.91 you move over your decimal points so your average apr is 391 percent guys so you’re

Paying 391 percent apr compared to your average bank loan which is usually about 12 percent that’s a real eye opener automatic renewal so that means when you go in to get this payday loan you automatically when they hand you a check it sounds real nice because you walk in and out in 10 minutes to get a payment but you have to sign over a check of yours to your

Bank account you give them access to your bank account you sign over a check that’s access to your bank so in two weeks if you do not pay them back they take that check that you signed over to your bank and cash it so that gets us to the dangers of those payday loans so the average interest rate is 261 percent to to 782 percent on payday loans renewal fees

They keep renewing you go in two weeks i can’t you tell them i can’t pay this payday loan you keep renewing it you keep renewing it so in six months time you’ve kept renewing that payday loan you’ve already paid over 400 in fees and you still have yet to pay the 400 national principal that you’ve advanced so you’re already at your 261 or above an interest

Collections and credit impacts even though they do not initially pull your credit if you do not pay them back they will report to your credit which brings your credit score down and can hinder you in the future from getting an actual bank loan and it will hurt your bank account because they will run that check that you initially signed over to them in the first

Place so you’ve now incurred not only fees on their end at the payday loan place you’ve now occurred fees on your bank and this has started this cycle of debt so you’re not in a hole that’s going to take you a long time to get out of alternatives to these payday loans try to budget better try to build an emergency fund try to go to friends and family to borrow

From them first try to go to your bank see if you can get a small bank loan they carry a way lesser interest banks are regulated they can only give you such a high interest the fees are way less if you have a retirement fund talk to your human resource department at your employer and see if you can withdraw from retirement borrow against your life insurance

If you have life insurance see if there’s a cash availability to borrow from if you have any questions feel free to contact me i’ll easily talk to you about the dangers of payday loans and see if we can find you alternative if you’re already in a hole with payday loans please contact me and we can see what we can do to help you thank you for joining me today if

You have any questions or concerns about anything we discussed you can reach me at m hodgkin’s h-o-d-g-k-i-n-s austinbank.com or feel free to call me at 903-381-9547 have a good day you

Transcribed from video
Lobo Strongview Episode 2 – The Dangers of Payday Loans By Longview ISD