Most likely you have seen banners like the following all over the internet…Pay day loans, payday loan advances, quick cash, etc. Payday loans have an extremely bad rap. However, not all payday loan companies are sharks, but there are so many payday loan scam artists waiting to prey on the desperate.   It’s the holiday season and there are over 1.8 million people typing in the keywords, “Holiday Payday Loans,” in the Google.com search box.  This spells, “Big money,” for payday loan affiliates, payday loan companies and payday loan sharks.





Some payday loan affiliate marketers are making a “Killing,” selling payday loans online.  Yes, I know of one affiliate marketer making over $50,000 monthly selling Payday loan services via daily mass emailing and Pay Per Click.


Google is actually cracking down on payday loan ads, etc…and many affiliate marketers are feeling the pinch.  I am not trying to discourage payday loan affiliates to stop selling payday loans. The following article from About.com and the Youtube video below was posted to make us all aware of how these loans are affecting those caught up in the web.


I just want to lay out the facts about payday loans so that the people who want to start a payday loan business, become a payday loan affiliate, or those who want a holiday payday loan would be well-informed.

By LaToya Irby, About.com Guide

Advertisements for payday loans make them seem like a fast, easy, no-nonsense way to get money when you’re in a financial bind. They tell you getting $100 is as easy as showing a recent paystub, a copy of your driver’s license, and a blank check. They don’t tell you that for many people, paying off that $100 can end up taking months, even years, and costing thousands of dollars to pay off.

Holiday payday Loans – How payday loans Work

Let’s say you need to borrow $100 until your next payday. You write the lender a postdated check for the amount of the loan plus the fee. Lenders calculate payday loan fees in one of two ways: as a percentage of the amount you borrow, like 10%, or as a set amount per $1 borrowed, like $15 for every $100 borrowed.

After you write the check, the lender gives you the cash or automatically deposits the loan into your checking account. Then, on your payday, the lender cashes your check unless you extend the loan. Extend the loan, also known as “rolling over” the loan, costs another fee and allows you to keep the loan for another period. You’re charged a fee each time you roll over the loan.

Holiday payday loans – What Payday Loans Cost

The Truth in Lending Act requires all lenders, including online payday loan lenders, to disclose the cost of the loan in writing before you sign any agreement to take the loan. They must give you this information in terms of the finance charge and APR (annual percentage rate). Even after reading this information, you might not understand just how expensive payday loans truly are.

For example, one payday lender, Cashcentral.com charges $17.50 per $100 borrowed. On a 10-day loan, your effective APR is nearly 640%! This is 15 times more than some of the most expensive credit card default rates. If you took out a 14-day $300 loan and couldn’t repay it for 2 months, you’d end up paying $210 in payday loan fees. The same scenario with a credit card would result in less than half the fees, even if you ended up with late charges.

A 2006 report by the Center for Responsible Lending reveals a typical payday borrower ends up paying $793 in interest on a $325 loan. This lender doesn’t charge an upfront finance charge that high. Instead, the borrower pays that amount over a period of time by continuously rolling over the loan.

Borrowers often find themselves taking out new payday loans to cover old payday loans and ultimately end up owing thousands of dollars on what started out as a few hundred dollars of debt.

Preying on the Poor and the Military

Over and over, statistics show that payday loan companies aim to take advantage of poor consumers. You’ll seldom find any payday loan stores in the upper-middle class suburbs of the city, where borrowers could actually afford to repay the loans. Instead, you’ll find them in the poor and black neighborhoods of the city and near military bases. For example, a Yahoo Maps search resulted in 12 cash advance and payday loan businesses within 5 miles of Fort Knox, Kentucky, a U.S. military post.

Alternatives to Payday Loans

It wouldn’t be right to completely dismiss payday loans without providing some alternatives.

Small loan from your bank or credit union
Cash advance from your credit card (shop around for the best rates and fees)
Small loan from a family member or friend
Payday advance from your employer
Hardship payment plan from your creditors
Consumer credit counseling
Emergency hardship programs (typically offered by your state, county, or city’s human resource department)

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REF:

Holiday payday loans

Holiday payday loans

Holiday payday loans

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