Cash advance and payday loan businesses promise quick cash or easy money to hold you over until your next paycheck arrives.
If you pay your loan off within a couple of weeks, there's no problem. If you delay, prepare yourself for some real sticker shock.
Our investigation shows that taking as long as a year to repay these loans back, could cost you more than five times as much as you borrowed, and feeling like you've been robbed.
In some areas around the country, city leaders want to outlaw the extreme interest charged by cash advance lenders.
Cash advance and payday loan businesses continue to spring up all over the country.
LaShunda Scales is a councilwoman in Birmingham, Ala. She says the fees some places charge are way too much.
"We have been inundated with so many payday title loans," Scales says. "All of that, and most of our people are just the working poor, and you're only able to pay off the interest."
Some payday loan businesses charge as much as 17.5 percent. So, a $400 loan is going to cost you $470 if you pay it off in two weeks.
If your bills have you bogged down and you're unable to pay if off for a year or more, hold onto your wallet.
We found the Annual Percentage Rate charged by one lender soared to 456 percent, or $1,825 in interest alone. So, you would end up paying back a whopping $2,225 on your $400 loan.
That's money people like Pam Myers and Lucretia Parker say they would have a hard time paying back.
"I had no idea interest rates were that high, my goodness," Parker exclaims.
"I didn't have any idea that the interest rates were so high, you know, I've had a couple of friends who've had experience with it, but to each his own," Myers adds.
Experts say payday loans are bad because they can start a vicious cycle of spending your paycheck before you earn it.
"People think, well it's ok, it's only for a week, two weeks, then I'll pay it off. Once they get into that mentality they say, ok, I don't mind paying that $75 or $100--whatever it might be--so I can get this loan to get this money because I really, really need this money and I need it now," says Tom Bartholomy, President and CEO of the Better Business Bureau serving Charlotte and the Southern Piedmont region of North and South Carolina.
In most cases, these loans are not paid off that quickly, putting the borrower at risk for a financial disaster.
One thing you can do to get yourself out of debt is to contact a nonprofit credit counseling service. There's at least one located in most communities across the country.
The key here is to make sure they are a nonprofit service and not something you have to pay to get your credit repaired or pay to have your other loans paid off.
They'll help you work out a plan to set up a budget and get out of that financial hole.
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