Now and then, an anti-payday loan article will appear that falls back on the same tired arguments. As an example, the Lansing State Journal article “Going with might not be worth fees” covers the very same old territory of 391 percent APR and also the regulatory differences around the U.S. As we’ll see, these are instances of politically convenient bullet points that fail to address the full reality of applying for a paydayloans.
In Michigan, a payday loans no faxing isn’t really an annual loan
For consumer convenience, the Truth in Lending Act (a federal law) needs that all consumer loans – such as the payday loan – clearly advertise the annual percentage rate (APR) charged. For an annual loan, this is useful. Yet a pay day isn’t an annual loan in the vast majority of cases. In Michigan, the average fee (interest) charged per $ 100 on a two-week payday loans no faxing is about $15. That’s 15 percent, or $ 15 dollars above the principal loan amount. Admittedly, some pay day offshoots run as little as seven days or as many as 31 depending upon the lender, reports the Journal, although two weeks is most common. In what way is that standard an annual loan? Annually, it would be correct to say that it had a 391 percent APR. But the standard two-week payday loan means $ 15 is the 15 percent fee per $ 100.
Lender fees do vary
When the Lansing State Journal advises consumers to exercise caution, they’re on the right track. Researching the best lender rates ahead of time makes sense and is advised by any pro-payday loan group worth its salt, including the Community Financial Services Association. Charging $ 15 per $ 100 loaned is standard, but there can be some lenders who charge a lot more. It varies by lender, and regulations vary by state.
However, the example the Journal uses is suspect because of its lack of context. William Lee, the Journal’s “average payday loans customer” example, took a $ 250 payday loans no fax but supposedly had to pay $ 400 to square things away. There is no mention of whether Mr. Lee defaulted on his loan, possibly because he borrowed more than he could afford to repay. There is also no mention of any other loan terms. According to the Michigan Office of Financial and Insurance Regulation, a $ 250 payday loan cannot exceed $ 35.95 in total fees, so Lee’s situation is far out of the norm. Instead of supporting their arguments with facts, the Journal has merely grabbed a scare tactics page from the Center for Responsible Lending’s playbook.
Your payday loan search should be fact-based, not emotional
In the right place at the right time, a payday loan could be vital. If a consumer shops for the best rate and avoids borrowing a lot more than they can afford to repay on their next payday, there should be no trouble. Making hasty decisions with your finances is bad, whether you are dealing with a payday loan or an auto loan. Research lenders online, make certain you understand fees charged before you apply and let the numbers do the talking. Let the old APR scare tactics of the Lansing State Journal and also the Center for Responsible Lending give way to objective truth.
