Everything goes smoothly, except when you default on your payment. Since repayment of payday installment loans is usually done through electronic withdrawals, when your account has non-sufficient funds, you will incur bank charges in addition to additional charges for late payments by your online lender. As a result, you will pay for bounced check fees and other finance charges that will make you financially indebted even more.

When it comes to issues pertaining to electronic withdrawals for payment of payday installment loans, does the government have laws to protect consumers? Not just the government has implemented regulations on this matter, but banks and lending institutions have also. In fact, as consumers, you have the right to stop such electronic withdrawals. Although exercising your rights against automatic electronic withdrawals will not free you from your liability with your online lender, it will help you save a lot from paying bank charges.

The law provides consumers protection from automatic electronic withdrawals through the Electronic Fund Transfer Act. This ensures that electronic payment of payday installment loans and other online short-term loans should not be forced upon a consumer. The Act also gives consumers the right to legally revoke authorization for all future electronic withdrawals by an online lender. Also, consumers are provided with an option to stop payment of a specific withdrawal, but a stop payment fee will be imposed by the bank.

So how can a consumer stop a specific electronic withdrawal? First, you need to notify your bank about it either personally or in writing.  The notification must be sent at last 3 business days in advance. If you can notify the bank personally, ask them to send you a written confirmation within the next 14 days or the stop payment order will expire.

Initially, when you applied for a payday installment loan, you have signed an authorization so your online lender could make electronic withdrawals from your bank account. But some lenders have been abusing this authorization by making successive account debits. Now, the law gives consumers the right to revoke the request from the bank and to stop future automatic electronic withdrawals by an online lender. However, before doing so, notify your lender. Also, provide the bank a copy of the letter of notification and confirmation from your online lender within 14 days to honor your stop payment request.

As consumers of payday installment loans, it is important to know and exercise our rights, especially in the case of preventing online lenders from making automatic electronic withdrawals from our bank account. Lenders have are given mandatory regulations to disclose this information to their consumers. The law requires that online lenders clearly disclose in their loan agreement the consumers the right of revocation of the electronic withdrawal authorization. If this is not disclosed, you have the legal right to sue your lender. Therefore, it is important to read the fine print of your contract to get the most out of your loan deal.

Late payments are charged with a fee that is calculated based on the amount of your payday installment loan and the outstanding balance your have. The payment due by you will include an interest fee, a late payment fee, and other additional fees that will be added to the outstanding balance. Each time you make late payments, the amount due on your payday installment loan will be recalculated adding the additional charges. Also, the longer time you waste repaying, the larger the fees that you will be responsible to repay.

So how do loan companies deal with late payments? Here are some actions that loan companies take in case a borrower is not able to make timely payments:

·    Loan Companies offer Rolling Over the Loan

When a borrower is having a hard time dealing with late payments, most loan companies offer a roll over of the payday installment loan. In a roll over the overdue payday installment loan, including all additional fees, is set up in a new loan.

·    Negative Impact on Your Credit Report

Defaulting on your loan payments will result in the loan companies reporting this to the 3 credit bureaus that comprise your credit report. These credit bureaus (Equifax, Experion, or Trans-Union) are the sources that attest to your creditworthiness. A bad credit report, reflecting a bad credit score, will make your future loan applications difficult and result in less chance of you getting good deals and rates on loans in the future. Also, credit reports now serve as the basis for your employment. Loan companies report to a system, the Teletrak, which acts like a reporting agency of payday installment loan borrowers. Once reported as delinquent, you will be sent to collections and lenders will no longer offer you credit.

·    Access your Direct Deposit Account

Making late payments or even defaults will give loan companies access to your direct deposit account where they deduct your paychecks directly. Although federal law has regulations regarding these collection practices of lenders, there are some loan companies who have required you to pre-sign an authorization, during your initial loan application, which will give them access to your accounts. So, be careful before signing any loan contract. And to avoid this from happening, make timely payments.

·    Filing of Civil Case

In the case of consistent defiance with your the payment, loan companies can opt for filing a civil case. Although a borrower may not be arrested, the lender can sue him. If the court finds the case justifiable, the borrowers salary may be garnished and property will be put in lien to pay off the outstanding balance.

Despite this course of action by loan companies, consumers of payday installment loans are protected by the FDCPA or the Fair Debt Collection Practices Act citing that any threatening collection practices are illegal. But in the long run, the best way to prevent loan companies from harming you is by avoiding late payments.

Borrowers tend to find that there is more convenience with short-term loans, like payday installment loans, because the fees are less expensive than incurring overdraft fees and late payment fees with other banking institutions. In fact, a survey on 1,240 banks, 1,292 credit unions and 832 major retailers, found that most large banks charge a median fee of $34 per overdraft, credit unions charge $25 for the same service, and the retailer will charge a median fee of $30. On the contrary, payday lenders charge their borrowers $17.50 for a short-term loan of $100 or less.

Believe it or not, short-term loans, like payday installment loans, can help a borrower become debt free earlier than getting bank loans or credit union loans. As long as the borrower makes timely payments and is responsible when using the loan, it will not become a burden. This is because longer long terms, such as banks and credit unions, require small payments for years. In the long run, the borrower is paying for a higher interest rate than he initially thought when he first signed up for the loan. Though payday lenders charge higher interest on short-term loans, it is still less than traditional lending because you pay the loan off quickly.

Banks and other traditional financial institutions would reject a loan application from someone with poor credit scores; but payday lenders will readily qualify you for short-term loans. In fact, payday installment loans help improve credit ratings by giving the borrower an opportunity to make timely payments. Payday lenders report to the credit bureaus regarding loans that are paid on time by borrowers.

In addition, short-term loans have convenient loan applications and quick processing. Most of these loans can be applied for online 24-7, and even on holidays. A borrower is required to fill-out an online application form completely and accurately.  The rest of the process will be done by an online sales representative for you. The online facility of short-term loan lenders helps borrowers get the cash they need instantly even in the comfort of their own homes.

Most of all, short-term loans offer loan terms and repayment options that suit your needs. Most lenders assess your payment capacity through your net income that you take home monthly. Even if you don’t have valuable assets, you can still qualify for short-term loans. There is no collateral needed to secure the loan, unlike in banks and other traditional loans. Proof of a steady income and an active checking account are all you need to be approved for the loan.

When facing unexpected expenses or periodic cash needs, most people look for a financial resource that provides instant relief. This is where short-term loans, like payday installment loans, play a big role. However, responsible borrowing and timely payments must be exercised to prevent being trapped in the debt.

You may consider getting a debt management plan if you find yourself slowly being drowned in debt and there is nothing else that will enable you to get your head above water. Debt management plans are also ideal if you want to get lower interest rates, have your late fees waived and have an affordable payment terms by consolidating your monthly payments into one.

When choosing a company that you intend to get a debt management plan, determine whether it is licensed and accredited. Find out how their program works and make sure that they explain to you how much your monthly payment will be and how long it will take you to pay off your loan. Also, look out for expensive upfront and monthly fees. Make sure that you will not be charged with annual fees in addition to monthly fees as this may make your debt more expensive.

In choosing a debt management plan, make sure that all your payments will be disbursed to your lenders on time. Ask how they disburse your payment and if they send you a statement for the payments. Also, check how they secure your personal and financial information. Ask for a written privacy policy on how they protect your information.

Because there is an increasing number of consumers of payday installment loans who use the services of companies offering debt management plans, scammers have found this an ideal ground for their malicious activities. Unreliable and fraudulent companies have been propagating exorbitant fees for the service they provide. So, choose a company that will truly help you get out of debt and avoid filing for bankruptcy.

If working a debt management company is not ideal for you, why not do it yourself. Aside from becoming a victim of fraudulent activities, you can save a lot of money for fees to be paid to a debt management company. How to do this? It’s very simple. Establish a budget and list all your necessary expenditures. Cut unnecessary expenses and prioritize your debts.

You may also call your lenders and ask if there is a payment option that they can offer you where late fees can be waived and interest rates reduced. You can also ask for a re-aging of your account by making your overdue accounts current. Although there will be no guarantee that your lender will approve your proposal, be assured of the fact that they will work with you as long as you show an intention to repay your loan.

But if you have a hard time doing debt management plans on your own, you can consult a good credit counselor. There are reliable consumer credit counseling agencies that provide credit and debt management advice. Getting a credit counselor is desirable before you apply for a debt management plan in order to make an informed decision. Since October 17, 2005, all consumers who intend to file for bankruptcy for unpaid accumulating loans are required to seek credit counseling. Credit counseling agencies are approved and are monitored by the Department of Justice.

A debt management plan is defined as an agreement made between a borrower and his creditors to help reduce or pay off their outstanding debts, including payday installment loans. This is usually provided by debt management providers who negotiate with creditors and pay off a consumers debt on his behalf.

When debt management providers buy a consumers debt, they establish a new set of payments for him. The new payment is set monthly and is usually based on how much a consumer can afford to pay. The payment will be disbursed fairly between all the consumers creditors.

If you are thinking of getting a debt management plan to cope with your accumulated debts, it is important to consider how much you will pay for the service and what costs will be involved. Usually, the debt management company will normally ask you to pay for 2 types of costs – an initial cost to set the plan and an ongoing cost to use the plan.

The initial cost of a debt management plan is the charge that covers review of your income, expenditures  and the expenses on carrying out the negotiations with your creditors to reduce your monthly payments. The initial cost is equal to the first one or two payments that you will pay to the debt management company. Take note that the first one or two payments will not directly go to your creditors but will be kept by the company for setting up your debt management plan.

When the debt management plan is already set up and running, the company will start charging for an ongoing management fee. The cost  include 17% of the amount you pay to your debt management plan monthly. In addition, management fees cover costs for managing the monthly payments to each of your creditors and any ongoing negotiations required to make sure that your creditors will stop charging additional interests. Also, the ongoing management fees are automatically deducted from your monthly payment for your debt management plan.

So for the question are debt management plans expensive, the answer is, yes. But, the benefits you get from these plans are worth all the costs.  You can have better control of your finances because you are able to make one regular payment per month, instead of separate payments. Your creditors will also freeze interest charges and additional fees on your debt. And most of all, you will have peace of mind because you will no longer be bothered by annoying calls from your creditors or debt collectors.  Plus, you can clear all your unpaid loans and other unsecured debts.

But you can also get debt management plans that are cost-free. How?  Create the plan yourself.  Personally negotiate with your creditors and propose a new payment plan that will enable you to pay off your debts conveniently. Most lenders will work with you if they found your proposal reasonable. You may also seek advice from a debt management company and ask them to set up the plan.  But the ongoing payments will be managed by you so you can save yourself management fees. Or, you search online for organizations that set up and manage debt management plans for free.

Whether you seek help from a debt management company to set up a plan for you or you do it yourself, the important thing is that you have the intention to pay off your debts no matter how.

However, consumers can get good deals and if planned wisely, consumers will be able to save money when getting payday installment loans. Here is what to do:

1.    Consumers must be able to decide the exact amount they need. Keep this in mind and borrow only the amount that can be comfortably repaid when the due date comes. Borrowing more that you can actually afford will be the start of your financial dilemma because borrowing above your means and not repaying the loan on time will leave a bad mark on your credit report.

2.    Conduct an extensive research on different payday loan companies to be able to get the best deals and low interest rates. Shopping around first will help you find lenders that will be worthwhile to working with. Find a legitimate payday loan company that offers loan quotes and can answer all your inquiries before applying for the loan. You may also ask some friends or relatives for references of good payday loan companies.

3.    When choosing a payday loan company, take note on the interest rate they charge. A legitimate company will disclose this information. A payday installment loans may have an interest rate that is as high as 30%, or as low as 15%. Make a list of the researched companies and the corresponding interest rates they offer.

4.    There are some payday loan companies who offer first time consumers with low interest rates or even free interest rates. This is a strategic step of some companies to market themselves and attract many consumers as they can. However, be careful with these offers as they may have accompanying expensive costs, or worse, the lenders are a scam.

5.    It is best to verify and cross-check the reputation of the payday loan company that you intend to work with. Fraudulent companies often get vital information from you and use this to their advantage. Working with illegitimate companies might be even more expensive than working with legal ones, since the former will be charging you high fees, trap you in debt, and threaten you if you are unable to pay. So, protect yourself and be on guard against fraud and scams. Carefully check the payday loan company’s privacy policy before submitting your application form.

6.    Look for discount or promo coupons offered by payday loan companies. These enable a consumer to take advantage of lower interest rates on payday installment loans. This is part of the marketing strategy to attract many consumers.

7.    Ask your payday lender for lower interest rates. Include reasons for this request so the lender will be willing to work with you.

8.    Referrals can be a helpful way to help you get lower interest rates and good deals with your payday installment loans. Most lenders offer discounts for those who refer others to them.

9.    Pay on time. This is the most effective way to save from you payday installment loans because you won’t be paying additional fees and charges.

10.    Before applying for a payday installment loans, calculate whether you will be able to survive with the money left from your next paycheck after the deductions for the loan payment. It is preferable to borrow only the amount you need and still have enough left to live on.

With payday installment loans, you can submit your loan application even on a weekend. However, applying on the weekend is more complicated than you think. Don’t you know that weekends are bank holidays? Remember that most of the cash from payday installment loans is deposited into bank accounts.

Ideally, loan applications for a payday installment loan should be submitted on weekdays or during regular business days, from Monday to Friday. However, if applying on a weekend is the most convenient time for you, you will probably have to wait until Monday to have the money deposited into your bank account.  If you need the money urgently on the weekend, this will not be very helpful. So what should you do if you must apply for a payday loan on a weekend ?

First of all, you need to find a lender or a lending company with a special financial support service that works with loan applications submitted on Friday evenings, Saturdays and Sundays. Keep in mind that there is no difference in the application process when applying on a weekend verses during weekdays. The main difference will be on the day the loan application is submitted. Remember, applying on a weekend for payday installment loans will still subject you to the terms and conditions of the lender you are working with.

If you find a lender that works with loan applications submitted on the weekend, carefully read their lending terms and conditions. As mentioned, the application process will still be the same as when you apply for a loan during weekdays. So, the loan term will still be two weeks and additional charges or interest rates still apply if you do not make timely payments.

Normally, the approved loan amount will be deposited to the applicants bank account within 24 hours. This is for loan applications submitted on weekdays. Since weekends are usually bank holidays, the money will be transferred using some other means. Lending companies use several money transfer companies to deposit cash loans for consumers applying on the weekend, an example is a Money Gram.

Whether you are applying on a weekend or on a weekday, the amount that will cost you for a payday installment loan will still be the same. High interest rates still apply and additional fees are charged for late payments and payment defaults. The qualifications and the requirements when you submit your loan application on a weekend are the same. Remember to fill in the online loan application form completely and accurately for easy and quick approval.

In a survey conducted by the National Foundation for Credit Counseling through a 10-question true/false quiz, 80% of the respondents said that they needed help in rebuilding their credit scores and managing their debts.  About 13% claimed that they needed a reshaping of their personal finances.

Unemployment, disability and insufficient income are the most common reasons why people are unable to manage their debts. They make late or even default payments because they don’t have any extra money to pay for their outstanding liabilities. Americans want to know if there could be a possible way to get out of debt and manage their debts.

The answer is a big YES. There are numerous ways to effectively manage debts. The important thing is that you are able to realize the worth of managing debts and will have the determination to live within a budget. Here are some effective ways to manage your money and thereby eliminate debt problems:

·    Make a budget and a personal debt management plan.

A budget will be a big help to help prevent impulsive spending. Start by making a list of liabilities that are due along with all your regular expenses. Then compare these expenses to your income. With these figures, make a budget and a management plan. By establishing a budget and strictly following it, you can foresee how much money you have to spend and how much money will be left for your savings.

·    Find ways that will help you save money and reduce debt.

When managing your debt, you not only need to spend wisely, you also need to save prudently. Savings creates room for credit-reduction and a debt-free life. Finding opportunities to save money is the most responsible way of dealing with debts.

·    Make timely payments.

Oftentimes, the main reason for overwhelming debts is not paying on time. Late payments on bills will add additional charges. Payment defaults on payday installment loans and other loans will also add additional interest rates. By making timely payments, you can avoid unnecessary spending on late fees and improve your credit score.

It isn’t difficult to find ways to manage and eliminate debt. All it takes is a little sacrifice and a change in your spending behavior. Managing debts means being conscious about spending within their earning limits. Although this wouldn’t happen overnight, a few steps with regard to managing debts can go a long way to achieving financial freedom.

There are numerous reasons why people borrow money, but most of the time, the money is gone with the wind. So how do you spend money from payday installment loans for a good reason? Here are the top good ways to use payday installment loans wisely:

·    Funding Emergency Needs

Payday installment loans are specifically designed for urgent and emergency needs. Borrowing money for emergency needs is a big help especially when you are left of no other option. Emergency needs may be related to medical expenses, loss of employment or recovery from a natural disaster. However, careful considerations must be exercised before you borrow money. Borrowing for emergencies is a good reason if you borrow only what you need and what you can afford to repay.

·    Financing a House Repair

Your house is your haven. Getting payday installment loans to spend on home repairs and renovations is a good reason. A house can be a very important asset in the years to come. If you intend to sell your house in the future, the value will rise and the property will gain equity. The amount you paid for the payday installment loan will be worth it.

·    Paying for Educational Needs

Getting payday installment loans to pay for college tuition fees and training is an investment. You will be investing in future financial security. People who have completed their college education are more likely to generate higher incomes than those who do not. Getting payday installment loans to finance education is a good reason.

·    Starting a Business Venture

If you want an additional income but do not have the capital to start a business, then getting payday installment loans will be a good option. Having your own business will enable you to provide for your family. However, borrowing money to start a business will only be good if you have done adequate research on your target market and have an effective business plan. Also, you must be able to balance your income and your debts.

Payday installment loans are a helpful tool to get through tough financial times. More than that, getting these loans will be worthwhile if you know how to use them wisely. In order to do this, assess your financial situation and see if you can afford to repay the loan.

Most consumers of payday installment loans who want to deal with their debt seek help to repair their credit rating. Due to the presence of credit repair scams, it has become difficult for them to find a credit repair company that they can trust.

Fortunately, the federal government has increased consumer awareness against credit repair scams. Payday installment loan consumers are given protection through an organization known as the Credit Repair Organizations Act or CROA. The act also ensures that consumers of credit repair organizations are given the information necessary to make informed decisions and to protect them from unfair or deceptive advertising business practices by these organizations.

Here are some of the key points imposed by CROA for consumers to easily identify credit repair scams and avoid them:

1.    Credit repair organizations do not charge fees before services are rendered.

Consumers are advised that there are no upfront fees for a credit repair service. On the contrary, credit repair scammers require you to pay a large upfront fee.  After receiving your payment, the credit repair company does little or nothing to help you repair your credit.

CROA mandates all credit repair companies charge the consumer after the credit repair service is rendered. The company cannot collect a fee until the task of repairing your credit has been completed. Keep this in mind in order not to be a victim of a credit repair scam.

2.    Credit repair organizations should not provide inaccurate or misleading statements.

Most credit repair scams falsely assure consumers that they can improve their credit score 100 points in 60 days and remove bankruptcies from their credit reports. Although this maybe possible, no credit repair company can promise that they will. They cannot do this because only the credit bureaus can. So take note, not all negative points on your credit report can be removed.

Credit repair companies that claim they can increase your credit score or remove any negative items from your credit report are violating federal law. According to CROA, these companies can only do what any lawyer can do in a court of law; that is, to do whatever it can to help the defendant but with no assurance of winning.

3.  Credit repair companies should inform consumers of their rights.

CROA mandates that all credit repair companies explain to consumers the disclosure statement, “Consumer Credit File Rights under State and Federal Law”. The statement provides information about consumer rights to their credit reports and ways to dispute any questionable information. Consumers are also given the right to cancel credit repair services within 3 days of signing up with no penalty.

CROA has provided protection to consumers against credit repair scams and fly by night, shady credit repair organizations. Consumers can now be assured that the money they spend for credit repair will be worthwhile.

Although negative points reflected on your credit report cannot be removed easily, paying outstanding debts can help. Paid debts reflect good points for your prospective creditors. Here are some ways that will help you get rid of the negative points on your credit report.

·    Pay your original creditors first.

Check out the negative points from original creditors, such as a bank or credit card company and pay them off before moving on to other debts. If you leave the account unpaid for a long time, most lenders charge off the debt and turn them over to collection agencies. Once a collection agency owns your debt, the negative comment will appear in your credit report. So, to avoid damage to your credit report, pay off your debts from your original creditors before they are given to a collection agency.

·    Pay off in full old accounts or debts.

If you intend to pay off your old debts, try to avoid debt settlements and debt consolidation loans. This is not ideal since you will be putting yourself into new debt. These two options are preferred only when your unpaid account will be turned over to a collection agency. Also, avoid paying only a portion of your debt because this will leave a negative impact on your credit report. So, always pay in full.

·    Negotiate with your creditor regarding their credit reporting activities to credit bureaus.

Your payment performance will affect your credit report. So in case you cannot pay your debt in full or on time, try to negotiate with your creditor before they send reports of your account to the credit bureaus. Although not all creditors will do so, there are some who will amend certain aspects of the report in exchange for payment. But beware of this practice as this may make your debt more expensive.

·    Seek help.

If paying off your debt is causing you stress, you can consult credit counseling organizations. These people can advise you on ways to get out of debt through successful debt management techniques and help you make a budget.

·    When inaccurate or incorrect details contribute to the negative points in your credit report, you can ask the responsible credit bureau for an investigation.

Some of the negative points in your credit report maybe due to inconsistencies in the reports given by your creditors. The law allows you to dispute these inconsistencies as long as you have documents that prove it. Submit a dispute letter to the credit bureau and provide supporting documents such as copies of personal checks, bank statements or any letters from the creditor. Contact the credit bureau after 30 to 45 days after sending your letter to check for updates on your credit report.

·    Most of all pay your payday installment loans, short-term loans and other debts responsibly.

Paying on time and taking every step of responsibility with your debt are the most important steps to avoid getting negative points on your credit report.

So how bad is a bad credit score, you may ask? A credit score is determined by using the FICO (Fair, Isaacs & Co.) score system. The FICO score is used by big credit reporting agencies (Equifax, Experian and TransUnion) in determining the credit score of a borrower. The range of scores is from 300 to 850 (the perfect one). Anything below 300 is considered a bad credit score.

The criteria used to determine a bad credit score depends on the type of credit you have and your lender. For home mortgages, a score of 640 is best, but 620 may be acceptable. Car loans and credit cards consider a FICO score under 620 as bad. Lenders of payday installment loans, may approve you for  credit after looking carefully at your credit history and assessing the risk of lending you money. This will be reflected on the interest rates of the loan because the lower the score, the higher the interest rates are.

So, what makes credit bad? The most obvious reason why we get bad credit scores is paying our bills and loans late. If you continuously delay your payments on your payday installment loans, credit cards, and mortgages, your credit score will be lower than if you make timely payments.

Another reason for a bad credit score is when you owe more than 80% of your available credit on your credit card. In order to avoid lowering your credit score, keep your debts below 25% of your available credit.

Applying for more than one payday installment loan or other loans at the same time can also affect your score. If you have numerous debts, this can lower your credit score, thereby producing a negative effect. On the other hand, a short credit history can affect your credit scores too. For this reason, it is better to keep old credit accounts open and avoid applying for new ones.

Bad credit scores result when you have unpaid bills. This includes your non-payment for tax liens, judgments and application for bankruptcies. This will appear on your credit report and will lower your credit score.

In order not to get a bad credit score, invest in building a credit profile that meets the criteria used to calculate the FICO score. There are 5 categories that affect your credit score according to FICO: 1) payment history (35%), amount of debt (30%), length of credit history (15%), new credit lines (10%) and types of credit used (10%).

It is very possible to raise a bad credit score into a good one. It can’t be done immediately or overnight, but it can be worked out with patience and hard work. Start working on the factors that can affect your score and address each for improvement.

So how do you consolidate payday installment loans? Here is how you do it:

1.    Get the outstanding balance on your payday installment loans and other unsecured debts if there are any. Calculate the total amount of your debt.

2.    Contact a reliable debt consolidation company. These companies help you consolidate your payday installment loans. They also offer a free debt counseling session where you can get advice from a debt counselor on your financial problems. The debt counselor will give suggestions on what consolidation program or debt settlement you need.

3.    Try to negotiate a reduced rate for your new loan. You may ask the debt consolidation company to negotiate with your lenders to get lower interest rates on your payday installment loans so you won’t have a hard time paying them off. Ask help on ways to reduce late payment fees and additional charges.

4.    Abide with your new payment plan. Negotiate for maximum monthly payments that you can afford to pay. Make sure that the new payment plan is suitable and convenient for you.

Can you ask consolidation of payday installment loans when these have been turned over to collection agencies?  Yes it is possible.

Here is what you should do:

1.    Check the Statute of Limitations or SOL on your debt.

2.    Then, request for a debt validation. If your SOL has not expired, the Collection Agency can win a judgment against you and get your wages. So, ask the collection agency to validate your debt by sending them a validation letter.

3.    If the collection agency granted your request for reconsideration, you may consolidate and pay off your debt.  Remember that negotiations are done between you and the collection agency. So the original lender cannot add additional charges. You transact with the collection agency and not with your lender.

4.    If in case the SOL has expired, the collection agency cannot win a judgment against you. But this doesn’t mean that you can run away from your debt. The collection agency will still collect it from you. What you will need to do is to send them a cease and desist letter. Or the most preferable choice is to apply for a consolidation loan and pay the debt off.

What are the benefits of consolidating payday installment loans?

If you apply for a debt consolidation loan, you lower interest payments, reduce late fees and create fewer payments. Also, you get out from your stressful situation because of too many unpaid loans

Consolidation of your payday installment loans will help pay off your debts with ease. This is the most suitable option when you are unable to cope with the monthly payments of your numerous loans. It is also the easiest and fastest way to pay off your debt.

Alarmed with this scenario, the Federal Trade Commission has recommended tips and alternative sources of quick cash aside from using payday installment loans.  But whenever it is impossible to find other alternatives, the commission suggests using payday installment loans wisely. Here are some of the tips they have suggested:

1.    Shop around for cheap payday installment loans. It is important to compare the cost of each lenders offers. Remember to look for payday installment loans with the lowest annual percentage rate (APR) and compare the fees charged by each lender.

2.    Keep in mind to borrow the lowest amount possible. The amount to be borrowed must meet only your emergency needs so can afford to pay back the loan with your next paycheck.

3.    If possible, ask for a cash advance from your employer. This is more affordable because there are no extra fees to be paid.

You may also look for other alternative sources of quick cash. Here are some of the avenues you might consider:

1.    Ask your bank or credit union if you can qualify for their small, short-term loans. They usually have cheaper rates than a payday installment loan. You may also try a cash advance from your credit card. However, they are more costly than getting a short-term payday installment loan.

2.    If you have a problem paying your bills on time, you may contact your creditors and ask for extensions. Most of these creditors are willing to give an extension on payments. But be sure to ask if they charge fees for these extensions or have higher interest rates compared to other payday installment loans.

3.    You may ask a consumer credit counseling service to help you develop a debt repayment plan and a budget. Most of these non-profit groups will help you for very little money or at no cost. Some credit unions and employers offer these services.

4.    Create a budget. Make a list of all your expenses in a week. With this, find ways to reduce or lessen your spending. You may also include building an emergency fund from the cuts from your expenses. This fund will be most helpful for future emergency needs.

5.    Find out about overdraft protection available from your local bank. Usually, the bank charges you for this protection so it is important that you know how much it costs.

If you have tried all these things and are still unable to fill your need for quick cash, grab an application form for payday installment loans. It may be the most suitable option in times of emergency needs. However, handle this resource wisely and responsibly to make most out of it. Borrow only what you can afford and repay on time.

The British Columbia regulatory changes include the following:

• A loan agreement should be legally made between the payday lender and the borrower that clearly discloses all charges, terms and conditions. In addition, lenders are required to display posters and signage about their rates and fees.

• Borrowers have the right to cancel the payday installment loan by the end of the following day, without paying any charges.

• Lenders can not collect payments on payday installment loans directly from the borrowers employer or have unrestricted access to his bank account. Lenders are also not allowed to ask for repayment of the loan before the borrowers payday.

• Lenders should not issue more than one loan to a borrower at a time and avoid rolling one loan into another with new charges attached.

• Lenders are prohibited from issuing a payday installment loan that is 50% of the borrowers next paycheck.

According to Solicitor General John van Dongen, one of the proponents of the legislation, “Many British Columbians use payday installment loans from time to time. However, the real cost of these short-term loans can be extremely high for borrowers when fees are added in and they can have trouble paying the loan off by the due date. We’re regulating the industry to ensure that these loans are being administered fairly and appropriately.” In fact, records show that there has been a significant increase in the short-term lending industry in British Columbia and there are about 250-300 payday outlets as of today.

To further ensure compliance to the new regulations on payday installment loans, as of Nov. 1, 2009, all lenders and lending companies in British Columbia should be licensed by the Business Practices and Consumer Protection Authority (BPCPA). The BPCPA will have the tools needed to ensure industry compliance and will be reviewed every two years.

However, Canadian regulators are warned by the Federal Reserve Bank of New York about some drawbacks regarding capping interest rates in British Columbia. In their study, households in states where payday installment loans are capped or even banned, borrowers bounce more checks, thus, incurring more costs than if they had applied for the loan. There are also more complaints against receiving annoying and harassing calls from collection agents.

In the conclusion of the study made by the Federal Reserve Bank of New York, the borrowers welfare is harmed when access to payday installment loans is capped or banned.  Price caps may only bring more harm to borrowers because lenders come up with pricing strategies and terms which work around these restrictions.

But according to Scott Hannah of the Credit Counseling Society, “These measures (regulating interest rates) will help borrowers clearly understand the costs associated with payday installment loans and assist those who are repeatedly using these loans. The British Columbia government is moving in the right direction with these regulations.”  The effect of capping payday installment loans depends on the weight of the legislation. How and when it is imposed will either bring positive or negative effect to borrowers.

With information gathered from 2,687 stores all over the United States, the survey came up overwhelming results. Surprisingly, the data acquired in the survey clearly revealed that payday installment loans and other short-term loans have fair and reasonable costs. The loans are offered with prices affordable for consumers that need instant cash or short-term loans in the case of unexpected financial emergencies.

According to Joseph Coleman, Chairman of FSCA, “Based on the study, it is clear that any attempts to impose artificial rate caps will result in the elimination of a product used responsibly by millions of Americans to address small dollar, short-term credit needs.” The study of the Ernst & Young firm reveals the following facts regarding the use of payday installment loans and other short-term loans:

·    The average revenue of lenders of payday installment loans and other short-term loans is $15.26 for every $100 loaned. This is compared to the lenders in store front establishments who have an average cost of $13.89 for every $100 loaned.

·    On a pre-tax and pre-interest basis, lenders of payday installment loans and other short-term loans earn an average profit of $1.37 per $100 on the principal loan amount, which in turn represents a modest margin of 9.1%, before taxes. This shows that lenders do not excessively profit or take advantage of the financial woes of their consumers.

·    There are no collateral requirements for this type of loan, so lenders face greater risk than lenders who require some form of collateral. According to the report of Ernst & Young, the average bad debt cost is $3.74 per $100 loaned or 26.9% of the total cost.

This study conducted by Ernst & Young is a helpful guide for the proposed legislation pending in Congress. There are proposals in Congress and in various states to reduce the APR from 397% to 36%. If this is enacted into law, such a fee cap will make payday loans unprofitable, lenders will cease to offer this financial product to consumers. This may be helpful to consumers drowning in debt but this is detrimental for those who need instant cash for emergency situations. Until the government offers convenient and easy to obtain financial options compared to payday installment loans and other short-term loans, there is no reason to eliminate the industry.

The CFSA is a national trade association that represents payday lenders. The new online lending practices will require all members of CFSA to follow state laws and regulations governing payday installment loans and must be licensed in each state before they do business.  Payday installment loans are legal and regulated in 35 states in the US. These states impose usury limits and set the cap for the annual percentage rates (APR) on these loans. The remaining 15 states (Arizona, Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Vermont, and West Virginia) don’t allow these loans and have banned them according to their current laws and statutes.

Although there are laws to protect the interest of consumers when getting payday installment loans, there are still lenders who have found ways to pervert these laws by working with the so-called “nationally chartered” banks based in a state that don’t have a usury ceilings. Another common practice of predatory lenders is to charge interest rates within the legal limits but have expensive processing and late fees.

The federal government works against these predatory practices; however, their efforts seem inadequate. As more laws are imposed, more ways have been found by lenders to violate the law. Because of these problems, some states are now placing limits on the number of loans that a consumer can get at any one time. This has already been enforced in the states of Florida, Illinois, Indiana, Michigan, New Mexico, North Dakota, Oklahoma, South Carolina, and Virginia. They have set up databases that require all licensed lenders in their state to verify the eligibility status of a consumer prior to granting any loan. This may be a bit hassle for consumers who wants to get instant cash, but this is the only way to help protect them and to reduce predatory practices of some lenders.

In response to these problems of payday lending, the CFSA has also done its part by imposing new online lending practices to be fair to lenders who have been doing their business legally and value their reputation. In addition to the mandatory membership requirements, the CFSA requires all their members to adhere to the new Online Lending Best Practice Policies:

1.    Full Disclosure of Requirements. The contract between the member and the consumer should include fully outlined terms of the payday installment loan transaction. They should also disclose the computation for the cost of the service, in dollar amounts and as an annual percentage rate (“APR”).

2.    Compliance to ALL applicable state laws. A member should not charge a fee or interest rate that is not authorized by state or federal law.

3.    Truthful Advertising Schemes. All advertising and marketing campaigns must not be false, misleading, or deceptive. Responsible ads and promotions must be upheld at all times.

4.    Consumer Responsibility Information. A member should inform consumers of the uses of the payday installment loan services. This includes placement of a “Customer Notice” on all marketing materials (mass media, social media, e-mail and other promotional materials).

5.    Rollovers. Rolling over of loans (an extension repayment option where payment of fees is paid instead of the outstanding balance) is not allowed unless authorized by state law and are only limited to 4 rollovers or depending on the state limit.

6.    Right to Rescind. Consumers must be given the right to rescind or cancel, at no cost, a payday installment loan transaction on or before the next business day.

7.    Reasonable Collection Practices. All due accounts must be collected in a reasonable, fair and lawful manner. Unlawful threats, intimidation, or harassment should not be applied to collect accounts. Members are required to adhere to the collection limitations in accordance to the Fair Debt Collection Practices Act (FDCPA). A member should not threaten or pursue criminal action against a consumer in case of payment defaults.

8.    Extended Payment Plan. A member should provide consumers with an extended payment plan with a longer period at no additional charge. A consumer shall be allowed to use the extended payment plan at least once in a 12-month period. This option should be adequately disclosed to consumers.

9.    Military Best Practices. Members of the military in active duty are given special consumer protections that include: (1) prohibition from collecting military wages as payment for loans and on contacting the military chain of command to collect payment; (2) establishment of information or educational activities about financial matters.

10.    Display of the CFSA Membership Seal. A member shall prominently display on its website or in a conspicuous place in its store the CFSA Membership Seal. This is to inform consumers of the company’s affiliation with online lending practices mandated by the association.

As the CFSA President has stressed, “By requiring CFSA members to provide Internet loans in accordance with the laws of the state in which the consumer resides, we are taking an important step toward ensuring that this service is both convenient and safe for them.”

So how can an innocent consumer of payday installment loans and other online short-term loans protect himself from these vicious online scams?  One tagline used to catch attention and is very crucial especially in these times reads, “Sign up with a Company You can Trust.” This is really important. Victims of most online scams are those that do not search for information about the loan company they are dealing with.

The most common online scammers aim to steal the identity of their victims. Consumers are warned to be extra careful with their personal information during online applications.  Beware of companies that want to sell this information and sell it to loan scammers.  However, consumers should not be discouraged. There are lenders of payday installment loans and other online loans who feel the security of your information during your online application to be of utmost importance to their credibility because their business depends on it. Also, they want to avoid being subjected to civil or criminal liability.

Just as the saying goes: it is better to prevent than to cure. It is hard to regain what is lost. So here are some security measures you can take to prevent scammers from stealing your personal information or identity during online loan applications:

1.    Look for security encryption marks. Look for an “https:” and not an “http:” on the website address. The padlock icon and address that begin with https means that your online application information is sent on a secure SSL encrypted connection. This will assure you that the information you are submitting to the company is safe from the prying eyes of scammers.

2.  Another security symbol you must look for in a website of an online loan company is the VeriSign symbol that looks like this:



Check carefully that it’s valid and not just a fake image. This symbol will tell you that the website secures your personal information and there is no malware – spyware – virus that results from leaking your data.

3.    Before signing up, be sure to read the fine print at the bottom of the website. Unlicensed lenders are required by law to state that they are NOT a LICENSED LENDER. Beware when dealing with these companies because they may be collecting your information for resell to third-party companies. If this happens, these third-party companies will sell your information to others. So, your information will be passed on from one person to another and you will have no control over your private information. It is therefore important to submit your information only to trusted companies.

4.    The most important to avoid when using public computers or connections during online applications. Most public computers have unsecured wireless connections and portals so they are prone to online scams and may get access to your information.
There is no better way of protecting yourself from online scams than to secure your data by using a secure website for your online loan application.

There is no better way of protecting yourself from online scams than to secure your data by using a secure website for your online loan application.

Critics have unwittingly saddled the payday lending industry. They say that these payday installment loans abuse helpless clients by charging them high interest rates. However, payday lenders defend themselves against this accusation by saying that they lend money that is at a very high risk, which means, they qualify a borrower for a loan even with bad credit scores. Also, payday lenders claim that their clients are fully aware of the rates and they understand the terms before a contract has been signed.

The debate whether payday lenders are giving an expensive loan option to their clients is best explained by a business administration student in New York University named Aaron Gold on his 2008 thesis entitled “Payday lending: Grounding the Policy Debate Through Economic Analysis.” In his thesis, Gold states that the high operating costs justify the high interest rates imposed by lenders on payday installment loans. However, contrary to the claims of the critics of the payday lending industry, payday lenders do not outrageously gain profit from these loans, although they may have higher profit margins than for traditional lenders.

In his study, he disclaims the fact that anyone is qualified for the loan so that payday lenders can prey on needy people. In fact, only those who have a verified stable income are eligible for such payday installment loans. They may consider the application of people with bad credit, but income is still the basis for the approval in order for the lender to be assured repayment of the loan.

Gold has also iterated on his thesis that payday installment loans are designed to be a convenient, one-stop shopping for those who need immediate cash. These loans have gained popularity because traditional bank loans are a hassle for the average income earner.

Gold illustrated the convenience of payday installment loans from the quoted example that compares these loans with a taxi. A taxi is an expensive means of transportation for long trips but it is a perfectly viable means for short distances. So when payday installment loans are used intelligently, they can help people save money over more expensive alternatives, such as credit cards and long-term loans.

As for the allegation that payday installment loans are expensive options for a cash resource, Gold points out that the rates are within reason because the lenders are not allowed to loan more than the actual net income of the borrower. Proper handling of the loans, such as making timely payments, is the key to keeping this type of loan affordable.

The most common practice to pay off payday installment loans is by giving your lender a post-dated check. The lender will hold the check until the schedule due date of the loan.  At the time the payday installment loan is due, the lender deposits the check, and the loan balance is repaid. Usually, post-dated checks are required by storefront lenders.

With the emergence of online payday installment loans, lenders do not require submission of a post-dated check anymore. Electronic withdrawal has become the most feasible means to pay off the loan. On the application, the lender of payday installment loan will ask for the bank account information (the name of the bank, account number, routing number, etc.) of the borrower to withdraw funds when the agreed day of repayment occurs. Once the loan is due, the lender will automatically withdraw money from the account of the borrower.

Electronic withdrawal is very convenient for both the lender and the borrower. The lender can just automatically withdraw online the amount from the borrowers account and transfer it to his account. As for the borrower, there is lesser risk of forgetting to pay off the loan when the due date comes. However, the borrower must ensure that there are sufficient funds available in his bank account during the scheduled due date or he may incur additional bank charges.

There are also lenders who offer installment repayment plans with longer and flexible terms to pay off the loan conveniently. However, they are some states who have regulations on how long the term should be offered. The various terms included in the installment repayment plan are paying weekly, bi-weekly, monthly, or bi-monthly within 3 to 6 months. With this type of repayment option, the borrower is given a burden-free means to pay off his loan.

In case you are unable to pay off your loan on the scheduled due date, most lenders offer renewal of the loan through a roll-over loan. In a roll-over loan, the borrower is offered another loan to pay off the previous loan. This will “roll-over” the balance of the old into the new one. However, borrowers should be careful with regards to these roll-overs. Additional fees are charged from the original loan and the new one. So, you end up paying more fees than you originally planned.

It’s still preferable to contact your lender if you are unable to pay off your loan on the designated due date. Most lenders offer loan extensions wherein a new due date will be either set by them or you. But, be careful to abide with this new set of due dates and do not default on your payments again. This may cause your lender not to trust you anymore.

The House Bill 1678, which is a repeal of a year-old rule that imposes an eight-loan cap for borrowers of payday installment loans within 12 months. According to the bill’s sponsor, Rep. Steve Kirby, this is to prevent the risk posed by online short-term loans. He reiterated that, “The evidence would seem to indicate that consumers are seeking higher cost, unregulated products.” He said that the current eight-loan cap is only making borrowers of payday installment loans patronize unlicensed online loan companies because of the greater demand for loans. He also added that if the eight-loan cap is changed, it will only put borrowers into greater debt and keep them in a cycle of debt.

Under the law passed in 2009, borrowers of payday installment loans are limited to an eight-loan cap and can borrow only $700 or 30% of their monthly income at any point in time. Usually, payday installment loans are short-term and borrowers are required to repay the loans with a post-dated check. When time comes that the payment is due, the lender will cash the check or he may give the borrower an option to pay in cash and get the check back. In case borrowers cannot pay off their loans by the deadline, they are entitled by law to be give an installment plan to the payday lender for consideration.

When the law went into effect in 2010, the State Department of Financial Institutions reported a decrease in payday installment loan applications from 3 million to 1 million. Complaints filed against online loan companies increased from 96 in 2009 to 108 in 2010. There was also an increase of complaints against storefront payday lenders from 120 in 2009 to 184 in 2010.

However, anti-poverty advocates insist that the new house bill will only make borrowers of payday installment loans unprotected from predatory lenders. The advocates are even claiming that the 2009 law is working. They feel that the legislature should be focusing on educating borrowers about payday installment loans rather than strengthening the regulations on payday lenders.

According to Beverly Spears of the Statewide Poverty Action Network, “Let’s attack the problem in a direct and focused way. Let’s build on the existing law and pass new protections on online loans.” She is also campaigning against unlicensed payday lenders that continue to victimize borrowers to pay off their loans. Under state law, payday lenders that are not licensed by the state have no right to collect and harass their borrowers to pay off their loans. These issues must be the addressed by the lawmakers but not at the expense of decreasing the number of loans that people can apply for. Consumers must be made aware that they don’t have to pay back predatory and unlicensed payday lenders.

Other opponents of the house bill also argued that lessening the eight-loan cap cannot prevent people from applying for short-term loans. These are the quickest financial resources they can turn to in times of urgent needs. In fact, they believe that the cap on the loan and amount of money that borrowers can have provides adequate protection for borrowers.

Repealing the bill may not be the solution for the problem on payday lending practices. It is in educating the people on ways to choose their lender and how to handle their loan conscientiously.

However, since most of these loans must be repaid in short-term, usually two weeks after the approval of the application, many are unable to pay on time. Many borrowers get caught up in the cycle of accumulated fees and finance charges.

In case you are one of those borrowers who is unable to pay your payday installment loan on time, you may negotiate with your lender. These are the things you should do:

1.   In the case where your lender calls you, do not avoid it. Avoiding your lender will not resolve the issue and they will only continue bothering you. It is better if you can approach your lender and have any documentation that reflects the current status of your finances. This will prove that you are unable to pay your payday installment loan but are willing to negotiate a new repayment plan. Talking with your lender will help both of you find ways and options on how to come up with a new repayment plan.

2.   You can offer your lender a payment plan that will enable you to pay your loan. Determine your principal amount and the interest of your monthly payment. Calculate your desired reimbursement plan that will help you cope up with your missed payments. Set-up a payment plan that is affordable and convenient for you. What matters most for lenders is to see a good payment plan that will repay the loan in a timely manner. Don’t wait with this option since most state laws allow a payment plan for borrowers who are unable to pay their loans.

3.   It is important that you know the laws in your state in case you are unable to pay your payday installment loan on time. Each state may have different rules and regulations on how payday lenders should deal with payment defaults, but the law requires them to provide options for their customers. In fact, some states put interest rate caps on their payday installment loans. The annual percentage rate should not be more than the cap amount. Also, some states require lenders to provide payment arrangements but this varies from state to state. Consumer protection laws are enforced to prevent predatory activities of some lenders.

4.   There are some cases that lenders put the responsibility for the collection of a defaulted payday installment loan  into the hands of collection agencies. These agencies are in charged of calling you and getting your payment. In this case, you may settle with them for one lump sum at a discounted rate. They will be willing to work with you.

5.   In most cases, you may consider applying for a debt consolidation loan. This will help you put your various loans into one payment that will be easier for you to repay.

6.   If your lender refuses to negotiate with you, prepare a backup plan. You may consider borrowing from your family or friends, ask your employer for a cash advance, or take out another loan that will roll over your first loan.

Whenever you decide to take out a loan, remember to pay it responsibly. Not paying your loan will lower your credit score which may hinder your chances of loan approval in the future. In case you are unable to pay your loan, negotiate with your lender early. But, remember to make payment arrangements that you can afford to keep.

With this concern about short-term loans and to ease the desperation of people in meeting their immediate financial necessities, the loans are not only simple to apply for, but also easy to repay.  For this kind of situation, installment loans are the most ideal type of loan.

While other loans have higher interest rates and the total amount must repaid back within a short period of time, installment loans offer better and convenient terms and options. In addition, they also have customer friendly repayment alternatives that make it easy to repay for the borrower.

Not like other short term loans, installment loans have longer repayment terms, usually 30 days. The borrower is given enough time to recover from his financial woes. Also, these loans are easy to repay in effortless installments payments. The monthly payment is pre-calculated in fixed terms that include the interest rate and the payment of the principal amount. With this kind of repayment set-up, installment loans don’t set a borrower up for an endless cycle of debt.

Aside from the fact that installment loans are easy to repay, they are also easy to apply for. You can submit your application request through the internet. The borrower will simply complete an online application form on the web page of a lender, along with his other personal details. There is no faxing of documents required, so you need to fill out the form completely and accurately. This process will only take a few minutes. Once approved, the cash will be deposited on your bank account within 24 hours.

Installment loans can be both secured and unsecured. But most installment loans of quick cash are unsecured and even people with bad credit can apply. Installment loans can be a quick financial resource with less burdening financial options for the borrower. Aside from being repaid in installments, the interest rate does not increase unlike other short term loans.

In this economic crisis we are facing, we need installment loans to meet our immediate necessities. An installment loan can be a quick financial resource in times of deep cash needs. And the most exceptional feature of these loans compared to other short term loans is their easy to repay option. They are not just easy to apply for but can be easily repaid as well.

However, some loan lenders take advantage of the financial needs of their consumers. They give the impression that they are doing you a great favor.  Many financial counselors advise people to be very careful when choosing their payday installment loan lenders. Some are very elusive in exposing their predatory behavior.  And before you know it, you have stepped into their trap.

It is important to shop around before closing a deal with any payday installment loan lender. Although we may not totally protect ourselves from predatory activities of some lenders, knowing the signs of their predatory behavior can be a big help. Here are some of the signs of predatory behaviors of loan lenders.

1. Short minimum loan term – Since payday installment loans are only short term loans, they are usually repaid within two weeks or on the next payday. However, surveys show that approximately 75% of the borrowers cannot fully repay their loan on the specified date. As a result, the borrower is forced to apply for a rollover on his loan at an additional cost. This is a strategy of predatory loan lenders in order for you to be stuck with them.

2. High interest rates – There is increased risk of the loan lender with a borrower who has poor credit scores. However, paying twice as much on what you have borrowed because of very high interest rates does not justify this reason.

3. Doesn’t consider your ability to repay – One strategy of predatory loan lenders is to let you borrow the maximum amount allowed, without considering your capability to repay. So if you are unable to repay the loan, they will collect additional fees and late payment charges.

4. Allowing you to get more than one loan at the same time. This is another sign of loan lenders expressing their predatory behavior.  Most state laws prohibit a borrower from taking out more than one loan at the same time. However, predatory loan lenders offer other loan options in order to provide ways to charge additional expenses for the borrower. Be careful when you ask for payment extensions or repayment options so you won’t fall for this predatory marketing strategy of payday installment loan lenders.

5. Mandatory arbitration clause – When you sign up on a loan agreement be cautious about this part of the contract. Read the terms completely and understand them thoroughly. Some loan lenders include a clause in their contract to force you to give up your right to sue them for abusive and predatory behaviors in lending.

So, consumers of payday installment loans are advised to choose their lenders carefully. If you are already dealing with loan lender exhibiting signs of predatory behavior, you can report them to credit regulating agencies and to the authorities.

Reading the very specific details on your loan agreement will not only protect you from some predatory practices of lenders, but will also help you know your rights as a borrower and consumer of installment loans. As a consumer, you need to know every single valuable information and term within your loan agreement. Here are some provisions on your loan agreement that you need to be aware of:

• Contact Information of the Lender

The lender’s contact information should be stated clearly in your loan agreement. This should include the lender’s company name, address, phone or fax number, and an email address. This information is important in case of inquiries and assistance.

• List of Interest Rates and Other Fees

Your loan agreement with your lender should include a list of interest rates and other fees. This must be stated clearly and completely. It is even more preferable if you let your lender explain these terms to you. Find the APR, and let your lender calculate the exact amount you need to pay per month for your installment loan. Also, let your lender discuss the fees for late payments or bounced checks and what options they can offer to avoid this.

• Payment Obligations

The repayment schedule and extensions must be clearly explained in the loan agreement. Ask your lender if there are additional fees for payment extensions and other options they can offer in case of payment defaults. Look also for the statement: “You cannot be prosecuted in criminal court for collection of this loan.” This statement is important because it means that you can’t be arrested for not paying your loan or end up in civil court.

In most contract or loan agreements with installment loan lenders, not all of the terms and conditions are clearly stated and emphasized. These hidden terms will only be revealed after the borrower has signed the loan agreement and later when they are asked to pay for a fee that they were not aware of before. With this, different regulatory laws are implemented to keep these lenders from abusing their consumers. Now, lenders are required to include a disclosure box stating clearly all the terms and conditions in a loan agreement.

Nevertheless, it is still in the hands of the consumer to prevent lenders from preying on their financial woes. Before taking out an installment loan, you need to examine your loan agreement carefully to protect yourself against these untrustworthy lenders. You need to know the legal and illegal terms included in your loan agreement. Here are some illegal stipulations that you need to watch for before signing an agreement with your installment loan lender:

• Annual Interest Rates

Different states have different provisions of how much lenders can charge on interest rates for installment loans and other short-term cash loans. However, most states cap on interest rates does not exceed 30% annually.

• Membership Fees

Some lenders charge a one-time membership fee, usually about $10 to $15 to first time borrowers. Before paying, check first with your state laws to see if this fee is allowed and legal.

• Service Fees

Although service fees are permitted by law in most states, there is a maximum limit that lenders must follow. If the lender charged you more than the limit stipulated in the law, you can take legal action. Service fees are charged for loan processing, verification, handling, and origination.

• Rollover, Renewal, or Extension Fees

Before getting an installment loan, it is important to know your state laws regarding the maximum number of rollovers, renewals, or extensions your lender is allowed to give you. Beware of lenders who have rolled over or renewed you loan several times more than the maximum legal amount.

If your loan agreement does not contain or state clearly the necessary information or may contain illegal entities in violation of the stipulated laws regarding responsible lending, you’re better not sign the loan. You can shop for other lenders or loan companies that will offer you better terms and trustworthy contracts.

However, financial lending companies sometimes loan consumers an amount greater than he can actually pay with his next paycheck. As a result, the consumer commits defaults resulting in adding interest and fees until he is caught in an endless cycle of payments. Once the consumer can’t make a payment, financial lending companies employ unfavorable collection practices.

These collection practices are the main reason why the government has passed regulations against financial lending companies. Here are some common collection practices that most financial lending companies employ and the corresponding actions taken by the government to protect consumers of payday installment loans.

• Collection by Phone Calls

When you apply for a payday installment loan, most financial lending companies require you to provide your phone number at work to verify your employment. So when you owe them money, they will collect by calling your phone at home or at work. Until you pay your loan, they will never stop calling and these poses a problem. Your work suffers because of this harassment, or worse, you may lose your job for continual personal calls.

The Fair Credit Reporting Act requires that debt collectors cannot collect money from you by phone, and consumers can advise them in writing to cease calling. If the company fails to abide with this, you can file a complaint and submit it to the Federal Trade Commission.

• Collection Practice Regulations by State

Most of the states have their own laws that prohibit or limit the collection practices and activities of lenders of payday installment loans. Some states even regulate the amount to be borrowed and the amount of interest rates for each loan. Some have also regulated the number of times a borrower can get loans in a year to avoid collection harassment by financial lending companies.

• Process of granting Military Loans

It has been observed that many financial lending companies prey on military members and families due to their secured payment. With this, the federal government has recently required any company offering military loans to be federally licensed. The license can only be acquired when the business is in complete compliance with all federal and state laws for collection practices. This may make it harder for military servicemen to find loans, but this will protect them from loan sharks.

• Regulations on Online Loans

According to the EFTA (Electronic Fund Transfer Act), a lender of payday installment loans cannot require you to pay the loan electronically. You are allowed to make a stop payment on any transactions from the lender, or you can close your account in the bank without any legal questions. However, you need to pay for the stop payment fees. Also, in this situation, financial lending companies can turn over your account to a collection agency or can report your non-payment to a collection agency or credit referral service, such as Teletrack, which may affect your credit rating.

With these regulations on the collection practices of most financial lending companies, consumers of payday installment loans can now breathe smoothly because their rights are protected. However, there is no other safe way to avoid problems with lenders than to pay your loan responsibly and choosing your lender wisely from the very start of the loan process.

Student loans can be funded by the government and private financial institutions. Student loans offered by the government are limited and regulated, and may not be able to cover the expenses for tuition and school fees. So, many parents and students seek student loans from private entities.

However, loans offered by private lenders varies from one year to another which makes if difficult to plan for expenses throughout your college years. And more often than not, the cost increases but never decreases. So at graduation, you may end up in debt and be forced to immediately find a job. But who hires an inexperienced graduate?  This is the beginning of your dilemma.

It’s a good thing to know that you can now consolidate your student loans into an easy and convenient personal installment loan. This loan will help you pay off your student loans with one single loan including interest. With a personal installment loan, you decrease your burden and stress.

Personal installment loans are good in consolidating student loans because they come with a fixed payment and convenient repayment terms. Unlike the interest rates on student loans that vary every year, the interest rates in personal installment loans do not vary throughout the loan so you can keep track of your monthly payments. You can keep on a budget with your finances because you will know exactly how much you need to allocate for the repayment of your loan.

One popular benefit of personal installment loans is that there is no need for any collateral to secure the loan. Also, even with a bad credit score or no credit score at all, you can still qualify for personal installment loans because there is no credit check completed by lenders. With timely payments and no default, you can even build and improve your credit score with these loans.

Application of personal installment loans is very convenient. If you want to avoid long lines and long waiting time, you can apply online. Online lenders are available 24 hours a day, 7 days a week. There is no need to fax personal documents.  All you need is to fill out the online application form completely and accurately.

Consolidating student loans has never been easier with the advent of personal installment loans. They help pay off your various student loans conveniently. Apply for a personal installment loan today.

According to Dr. Charles Richards, borrowing money and installment loans have the following benefits to the consumers:

1.   It helps redirect negative behaviors to more positive choices. According to Dr. Richards, the way from poverty to financial health and freedom is not easy. It usually involves responsibility, goal setting and the replacement of fear and desperation with examination and communication. This involves sitting down and looking at your budget, preferably with a trained professional who can explain each aspect of your budget and help you come to the right decision on how to handle your finances. Borrowing money helps boost the morale of consumers by having an alternative option when faced with a financial difficulty.

2.   It helps consumers to value personal financial freedom. The pressure to repay borrowed money or installment loans enables a consumer to value saving for rainy days. Consumers learn what it means to save for something they really want and to establish goals when repaying debt responsibly. Also, it develops a desire in consumers to move ahead in life and not be stuck borrowing money and repaying numerous installment loans.

3.   It allows a consumer to achieve personal responsibility and financial independence. Borrowing money including installment loans, allows a consumer to utilize money to meet important goals. Also, it helps consumers approach debt in a responsible manner. Borrowing develops a deeper relationship with money by improving one’s personal self-esteem and independence.

4.   It helps consumers achieve a financial goal. Most lenders of installment loans have a worksheet that examines their consumers financial picture. In contrast to critics of this industry, lenders help their consumers achieve financial goals in order to lessen the burden when repaying the loan. They sit down and get to know their consumer, one on one, by evaluating their circumstances, lifestyle, employment history, and their individual needs. They outline a budget plan that works for the consumer.

5.   It helps people establish good credit, making a good impact on the country’s financial stability. It is easy to see that banks are very strict with requirements needed to get a loan, especially for someone with a bad credit score. But through borrowing money from installment loans, people with bad credit are given the opportunity to improve their credit scores by repaying the debt on time. In addition, small personal loans, such as installment loans, aid people in these tough financial times. With the help of these loans, people can have an option to turn to when in need of immediate cash.

The danger in borrowing comes when lenders take advantage of the consumers financial woes by creating loans with payments and fees that are difficult to repay.  On the brighter side, borrowing money develops good morale among consumers. The key is choosing the right lender and repaying the loan responsibly.

There are two major types of installment loans. They may be unsecured or secured. With an unsecured installment loan, the borrower will not be required to give collateral before the lender issues them the money. They usually do not require a credit check, so people with bad credit scores can apply. However, the borrower maybe restricted from borrowing high amounts and the interest rate may increase due to the high risk on the part of the lender.

On the other hand, with a secured installment loan, the lender requires a borrower to have collateral that can serve as a secured item in case the latter makes payment defaults. A mortgage or car loan is an example of a secured installment loan.

There is also another type of installment loan called a share-secured loan. For this type of loan, share-secured products are offered usually by credit unions. Share-secured installment loans are tied to the borrower’s credit union savings account or to a certificate of deposit. Since the loan is secured the interest rate maybe lower.

Installment loans also offer a repayment period better than payday loans. With payday loans, the loan term is usually short-term, usually on the next payday. Installment loans offer longer repayment periods, usually 3 months, 6 months, or several years. The interest rates of installment loans are lower and calculated differently than payday loans. Installment loans are also superior to cash advances on credit cards. With a cash advance on a credit card the interest rate will be 25% or more; but with installment loans, it will be less than that.

Installment loans can be used for many purposes. These loans assist in times of short-term emergencies, such as unexpected hospital bills, paying overdue household bills or a sudden car repair. Borrowers with bad credit are helped by installment loans. Installment loans have less negative impact on a credit score than a credit card balance. You can still apply even if you have a score below 720.

Moreover, installment loans can be used to pay off crushing credit card balances. Since the application is fast and convenient, a borrower can quickly take out a loan and pay off the credit card balances, then repay the loan over a longer period of time. Borrowers who have no credit history can also benefit from installment loans. Borrowers can start with a small personal installment loan and make timely payments. A good payment history improves their credit score and builds a history.

You can get the best deals out of installment loans. Here are a few tips you need to follow. Always choose a short loan term to save interest costs. Choose your lender carefully. Never miss a payment deadline. And, maintain and take care of your credit score responsibly.

Business installment loans work similarly to other short-term personal loans. The application is easy and fast. Once the lender approves you for the loan, he will give you the money along with an agreement that you will repay the principal amount plus interest in equally divided monthly payments in regular installments. The monthly payments are fixed and the same for the duration of the loan. The term varies depending on the lender, but usually payments are for one-month, three-months, six-month terms, or even one year.

People starting a business and thinking of getting an installment loan for a source of financial help can benefit in many ways from these loans. These include the following:

1.   Pay with less financial stress.

Knowing exactly how much they will pay every due date, makes it is easier for people who start a business to allocate a budget for the loan payment. They have already planned to set aside the amount for the payments, so when the due date arrives, they can simply withdraw the money and make timely payments. Some may even have a different account allocated only for loan payments.  The best account will be an interest-earning one. So, aside from being able to pay on time, the money will continue to grow.

2.   Gain flexible repayment options.

Since cash advance payday installment lenders are assured of timely payments, most lending institutions will gladly work with people who want to start a business. Also, they offer the best payment arrangements because there is less risk compared to lending money to salary-earning people who have bad credit.

3.   Get favorable interest rates, terms and conditions.

As mentioned earlier, less risk is undertaken by lenders with people with a business. So, most lenders can offer them favorable interest rates, terms and conditions. This is true as long as timely payments are made.

There are other alternative sources of financial help that people who wish to start a business can opt for. They can open a business line of credit that works like a credit card. The interest you pay depends on how much you actually spend.

Getting a balloon loan may also be an option.  This is where you repay the entire principal amount and interest on the loan in one large payment.  Business installment loans are still the most convenient and quickest way to get hold of cash. Applications can be done online and you will know if you are approved within a few minutes. Requirements are minimal and there is no need to fax any documents. You can get the cash you need within 24 hours after the approval of your loan.

So, if you are just opening a business or planning to start a business and you need financial help, a business installment loan may be your best option.