The United States government has again issued consumer warnings about payday loan debt through the Federal Trade Commission. The FTC again warns that borrowers taking out cash advances will face “inflated fees”. What’s more, if borrowers don’t repay their cash advance loans in a timely manner, they will likely be targets of “unlawful threats”. Along with the US government, there are a number of payday loan debt consolidation companies sending out warnings stating the same thing.
These firms work daily to consolidate payday loan debt for hundreds of borrowers. And like the FTC, hear on a regular basis about harassing collection calls as well as other strong-arm collection tactics such as wage garnishment and bank levies.
Payday Loan Consolidation
It’s not enough to issue warnings as so many consumers either do not get the message or refuse to believe the extent of the trouble associated with cash advances. Because there are options for payday loan help debt consolidation, consumers might believe nothing bad can happen.
But here’s why borrowers end up having to consolidate payday loans: they become trapped in a cycle to which there is no end in sight.
Say a borrower takes out a $400 cash advance. He or she will get about $380 in cash after processing fees. But will owe $480 in principal and interest in just 14 short days. And that’s not nearly enough time to save-up almost $500 and still have enough for living expenses.
Getting Out of Cash Advance Debt
Not only is the federal government continually sending out consumer alerts about payday lending, states are likewise issuing warnings as well as enacting laws. There are nearly 20 states which have outright banned cash advance companies or restricted by extensive regulation. However, consumers in these states still have access to these short term loan products through the Internet.