Installment Loans Info Center

Informing The Public About Installment Loans

 

In many situations, online payday installment loans are a great help in times of financial distress. However, if you scratch a little bit under the surface, many people have found loopholes and have shared common problems with online payday installment loans. This article will be discussing a more generalized overview of how and what are the common problems encountered by consumers of online payday installment loans. In addition, making yourself aware of some of the common problems most consumers are facing with payday installment loans will be a great help in finding ways to use these loans properly and responsibly.

Here are the common problems cited with online payday installment loans:

Overuse of Payday Installment Loans

Most online payday installment loans are designed for consumers having an emergency financial situation. Emergency financial problems can be faced easily if you have access to instant cash, for example, an online payday installment loan. The problem, however, is that some consumers use these loans even when they really are not facing a true emergency situation. These people are those who fail to budget and manage their money wisely and end up turning to payday installment loans to bail them out.

In fact, many of these consumers use payday installment loans on a weekly basis. They use these loans before each and every payday and never get themselves financially in a sound position. For example, if the cost of payday installment loans ranges from $10 to $30 per $100 borrowed, the effective annual percent interest rate can quickly add up when annualized. This is an expensive way to borrow money week by week. But for those who want to circumvent bank charges, payday installment loans can be very helpful avoiding the cost and the credit damage form a single NSF check. Therefore, online payday installment loans are wonderful tools when it comes to emergency situations. However, they should not become a way of life.

Falling into the Trap of a Predatory and Abusive Payday Installment Loan Lender

Unfortunately there are disreputable and abusive lenders that have been actively pursuing consumers of payday installment loans. A lender can be predatory, especially with the cost and charges of a loan, and take advantage of the urgent need for cash of consumers.  In fact, this is one of the more significant common problems associated with payday installment loans and the US government has been doing their best to put an end to it.

So, it is therefore essential that consumers check the reputation and the loan terms of a lender they are going to deal with. It is important for any payday installment loan consumer to understand that before engaging in any transaction, they have to check the reputation of the lender. By doing their homework (shopping around first), they can help reduce the chances of being trapped or becoming a victim of predatory lenders and avoid these common problems.

Unable to Utilize Reliable Government Resources

Many consumers fall in the trap of predatory lenders of payday installment loans because they fail to take advantage of the informational services that are offered by the government. In fact, the U.S. government has been diligently proactive when it comes to overseeing the activities of payday installment loan lenders and other related services. You can easily find more information about payday installment loans and rules and regulations regarding these loans through your state authorities and online.

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The government has been warning many consumers of payday installment loans to keep away from offshore online lenders because many are involved in predatory lending practices. Why so critical of these offshore online lenders? What differentiates them from qualified payday installment loan lenders found within the countries borders? What are the dangers of working with offshore online lenders?

These are questions that need to be addressed in order to understand the pros and cons of not knowing your online lender. Many consumers have complained about predatory lending practices only to find out that they cannot fight against them because they are offshore online lenders.

The state regulations for interest rates only apply to those payday installment loan lenders that are doing business within the borders. So, this leaves offshore online lenders able to charge fees over and above the regulated rate imposed by the state governments. In fact, there have been offshore online lenders who are actually charging up to 2000%.

These offshore online lenders disguise themselves as online payday installment loan lenders in a typical web format without having anyone questioning or suspecting their place of origin. This practice usually ends up attracting a wide variety of new borrowers. In fact, some of these offshore online lenders have practiced fraudulent behavior and other predatory lending practices, such as withdrawing money out of a borrowers bank account without prior permission or authorization. Also, collection practices of these offshore online lenders is not regulated by the state, so many of them can harass or abuse borrowers.

One sad fact about these offshore online lenders is that when a consumer wants to file a complaint against them, since they are located out of the country, the whole process virtually ends up in a dead-end challenge. But, why are there still consumers who keep applying for payday installment loans from these offshore online lenders?  Here are some of the common reasons:

·    These lenders design their websites similarly with other regular lenders.

·    Consumers may have applied to many other payday installment loan lenders within the country and may not be qualified anymore.

·    They offer a higher loan amount than what is allowed by the state regulations.

Recently, there have been various complaints regarding offshore online lenders:

·    The interest rates and fees are not fully disclosed to warn borrowers of the very high payoff costs.

·    Since many are getting these loans for a higher amount, many of them fall deeply into debt. Also, they have a hard time getting out of debt because of rollovers and re-loaning are increased.

For this reason, consumers are warned that legitimate online payday installment loan lenders follow all state rules and regulations. Therefore, it is advisable to shop around and research the different online lenders on the web meticulously. This may serve as a red flag whenever a borrower encounters:

·    A customer representative who does not answer your questions or evades the issue

·    Promising money in minutes, especially in larger amounts than other lenders

·    Putting pressure on you to sign quickly.

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Payday installment loans are great financial resources in times of urgent cash needs. The application is easy and qualifying for the loan is simple. However, due to their sub-prime form of lending, some payday installment loan lenders practice predatory lending. They charge very high fees and interest rates that keep many consumers in a cycle of debt.

Though there are still legitimate and truthful lenders in terms of service, it has been found that almost 89% of them are unscrupulous and prey on the financial needs of consumers. This is why it is important to take note of the common signs of a predatory lender. This will be a great way for consumers to avoid them and to prevent themselves from becoming a victim. The most common signs of a predatory lending are as follows:

1.    Triple digit interest rates

Payday installment loans carry high a risk of security so lenders typically charge high fees. Usually, predatory lenders will charge very high interest rates which may equal 400% APR and higher and will make consumers unable to pay off their loans.

2.    Short loan terms

Almost 75% of payday installment loan consumers are unable to repay their loan because it is due within two weeks. So they are forced to get a loan “rollover” at an additional cost.

3.    Loan flipping (such as, extensions, rollovers, or back to back transactions)

Predatory lenders earn most of their profits by making multiple loans to cash-strapped borrowers. In fact, 90% of the payday installment loan industries revenue comes from making additional larger loans to the same customers. This is why state laws have been enacted to limit or regulate the number of these rollovers and extensions. There are even states that prohibit this predatory lending practice.

4.    Borrowing from multiple lenders at a time

Most borrowers trapped in the so-called “debt treadmill”, have been encouraged to get a payday installment loan from one lender to repay another. As a result, they are accumulating debts but have no additional cash on hand, just more renewal fees. Many state governments have been actively prohibiting this practice, but many predatory lenders still practice within other related legal options.

5.    Overlooking the borrowers ability to repay

Many predatory lenders encourage their consumers to borrow the maximum allowed, regardless of their credit history. In case the borrower can’t repay the loan, the lender will collect multiple renewal fees leaving the borrower in severe debt.

6.    Deferred check mechanism

For payday installment loan borrowers who are unable to make good on a post-dated check securing the loan, late fees and NSF check charges will result, along with threats of criminal prosecution for writing a “bad check.”

7.    Mandatory arbitration clause

Mandatory arbitration clause be signed is eliminating a borrowers rights to sue for abusive lending practices. This is often the best sign that a certain lender is a predatory lender.

In a survey, 12 million Americans are trapped every year in the cycle of 400% interest on payday installment loans, even with a 36% cap on the annual interest. This is because there are many predatory lenders who can find ways to violate the law. The best way to protect yourself from these lenders is to avoid them with these simple steps:

1.    Start a savings account from your raises, bonuses and extra earned cash.

2.    Open an emergency account to be strictly used for emergencies only.

3.    Recognize that there are no quick fixes for financial issues and focus on long-term goals.

4.    Never accrue new debts in order to pay off old debts.

5.    Take time to consider all the aspects of a loan application. Also, fully understand any loan documents before signing and avoid signing blank spaces.

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Had a hard time coping up with immediate necessities?  Applying for short-term personal loan can be a big help. However, since most of these loans need to be repaid in shorter duration, usually after two weeks, this may not fully address your need for financial freedom. Don’t let a short term loan put you in a situation of an endless cycle of debt.

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.

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Payday installment loans are one of the most popular financial resources for people with bad credit. Turned down by traditional lenders and banks, many people find financial relief with instant cash loan lenders. There are no credit checks involved, quick approval time and convenient loan applications.

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.

 

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