Payday Loans--Not All Lenders Are the Same

[Nov 26, 2008.]

 

Take Care with Payday Loans

Anyone considering taking out a payday loan should make certain that they deal only with a reputable lender. The importance of that advice was underscored earlier this month when the Federal Trade Commission (FTC) and the State of Nevada accused 10 online payday loan companies of violating federal and state laws.

In a statement, the commission announced that it had charged the 10 payday loan lenders--all of which are related, and are largely based in the United Kingdom--with failing to disclose clearly, and in writing, important loan terms, and of using deceptive and abusive methods during the collection process.

Some Payday Loans Rights

In particular, it is alleged that the lenders violated the Truth in Lending Act and Regulation Z because they did not in advance of agreeing the loan 'clearly and conspicuously' provide basic details about the advance. These details, which must be provided in writing, included the amount of the loan, the applicable interest rates (APRs or 'annual percentage rates'), finance charges, the repayment schedule, and any late payment fees that the lender might later wish to levy.

Some consumers complaining to the FTC about these lenders claim that--when they encountered problems in making repayments--they were told that they could be sued, that their property might be seized and that their wages could be garnished. They also claim that they received repeated, sometimes abusive, calls at their workplaces, and that employers, and co-workers were told of their purported debts. Some even say that they were threatened with arrest. All unfair and deceptive collection tactics breach the FTC Act.

Trustworthy Payday Loan Companies

For many, payday loans are a valuable source of additional finance during particularly difficult times. It is, however, always a good idea to check out a company before doing business with it. There are plenty of trustworthy and reputable lenders out there.

 

About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.