General Issues Related to Payday Loans

Those who are in the business would have you believe that the majority of people who take advantage of this kind of loan do so sparingly. Nothing could be farther from the truth. Once on the payday treadmill, it is almost impossible to get off. Many borrowers believe they are paying off the principle when, in fact, they are paying fees and interest because that is what is taken first.

Local payday loan companies are often found in impoverished neighborhoods. They know the best places to find their victims. Their advertisements are meant to be misleading. For instance, they can offer up to 30 days with a 0% interest rate but not be as forthcoming with respect to the fees and penalties that will drive up the cost of the loan. Clients are told their repayment check will not be cashed until a specified date. However, if the check is cashed early, and they often are, they can bounce which results in more penalties not only from the lender but from the bank, as well.

More Than a Few Bad Apples

There are thousands of companies in the payday loan market. Some are worse than others, but none of them offer the kind of help the people who use them need. If you’re in trouble, you’ll just end up in deeper trouble. There are just some of the worst companies. Money Mutual is on the list because of its celebrity spokesperson, Montel Williams. It is clearly a payday loan company or, at the very least, puts their clients in the hands of payday loan companies.

200cash

http://www.consumeraffairs.com/finance/200cash.html

It seems that 200cash specializes in taking a $19 fee from people who have never applied for a loan with them. They also take this fee from those who apply as well as additional fees and payments but never deposit the loan funds. This company had the most complaints by far.

800loanmart

http://www.consumeraffairs.com/finance/800loanmart.html

This company appears to hire some very rude people according to the consumer complaints. What the complaints about 800loanmart should teach you is that when you are in trouble, taking out a payday type loan will expose you to people who can and will make your life miserable. Not only will you sink more deeply into the quagmire, but you will be treated cruelly and threatened for your trouble.

Ace Cash

http://www.consumeraffairs.com/finance/ace_cash.html

Ace Cash seems to specialize in depositing money in accounts belonging to people who have never applied for a loan. They then harass these people, and try to force them to pay for something they either never received or asked for.

Ace Cash Express

http://www.consumeraffairs.com/finance/ace_cash_express.html

Many of the complaints against Ace Cash Express are from former employees. They make for extremely interesting reading. It is hard to understand how a company can stay in business considering some of the things the employees are saying. If these comments don’t discourage you from taking out a payday loan, nothing will.

Arrowhead Investments

http://www.consumeraffairs.com/finance/arrowhead.html

The complaints against this company are diverse. Some complain they are being harassed for loans they never applied for. Others report threats and rudeness.

Cash Today Ltd.

http://www.consumeraffairs.com/finance/cash_today.html

One of the things to learn from the comments about this company is that once you have done business with a payday loan company, you may be fair game. The question is, why are certain people called and threatened when they have never had a loan with that particular company? You’ll also notice that requests for written proof are denied.

CashAdvanceUSA

http://www.consumeraffairs.com/finance/cashadvanceusa.html

More of the same – customers being called to repay loans they never applied for, threats of arrest and jail, and rude behavior. The more you look at the complaints for all the companies, the more you should realize how dangerous payday loans can be.

Cashcall

http://www.consumeraffairs.com/finance/cashcall.html

The complaints against this company should chill your blood. The amount of money people are paying back for their loans is astronomical. There are a lot complaints that list the amounts borrowed and what has been repaid. Anything has to be better than a payday loan.

Cashnet

http://www.consumeraffairs.com/finance/cashnet.html

More stories of threats against people for loans they never applied for. There are complaints that the people who call and harass “customers” have accents that are difficult to understand. It appears that some companies believe that if the target can’t understand what is being said, the bill might be paid.

Check ‘n Go

http://www.consumeraffairs.com/finance/check_n_go.html

This company just has a fair number of complaints. They are different, and several are from repeat customers who finally got tripped up by the system. In the end, there’s no way to win with a payday loan.

Fast Cash

http://www.consumeraffairs.com/finance/fast_cash.html

There are a lot of complaints by people who are being threatened with jail or actually being sued. Once a payday loan company has you in its clutches, there is almost no way to extricate yourself.

Insta Cash

http://www.consumeraffairs.com/finance/insta_cash.html

More innocent people are being threatened. It can be very frightening when a company calls, has some of your personal information, and demands repayment of a loan you never applied for. Think of how much more frightening it can be when you have applied.

Instant Cash USA

http://www.consumeraffairs.com/finance/instant_cash_usa.html

Apparently, being difficult to understand is a tactic used by people trying to collect debts. They must believe that if they connect with someone who is afraid a loan has been taken out, that person will pay even though they may not owe anything to that company. It must work some of the time, or the companies wouldn’t try that trick.

Money Mart

http://www.consumeraffairs.com/finance/moneymart.html

Here are more stories and more pain and misery. No one wants to end up in financial trouble, and payday loan companies take advantage of people who can least afford it and are unable to protect themselves.

Money Mutual – endorsed by Montel Williams

http://www.complaintsboard.com/?search=money+mutual&everything=Everything

http://www.consumeraffairs.com/finance/money-mutual.html

You would think that someone with the reputation enjoyed by Montel Williams would reserve his personal endorsement for companies with impeccable reputations. Not so. The Internet is full of stories about the suffering endured at the hands of Money Mutual. Like other Payday type companies, their actual fees and other charges are difficult to identify. Lest you think Money Mutual is not in the business of payday loans, think again. Look at http://www.consumeraffairs.com/finance/blackcard_loan.html where you will find a complaint against a company called BlackCard Loan that the consumer found through Money Mutual.

One Click Cash

http://www.consumeraffairs.com/finance/one_click_cash.html

There are so many complaints about this company, it would take a long time to read every one of them. People get confused because the company is not clear about what they are doing. People end up paying many times the original loan amount before they finish if, indeed, they ever finish.

Payday Loan Yes

http://www.consumeraffairs.com/finance/payday_loan_yes.html

Here is more and more and more of the same. Story after story says the same thing. The company tries to get money from people who never took out a loan, or they take so much money from people trying to get out of debt.

USFastcash

http://www.consumeraffairs.com/finance/ufastcash.html

It is true that people should take responsibility for their actions and understand that, regardless of the reason, a failure to pay will result in an unpleasant experience. However, everyone is human and deserves, at least, some courtesy and consideration. When you do business with a payday loan company, you are often treated as if you are no longer human.

The Real Solution

There are some alternatives to payday loans. Some credit unions have started to offer their own version of a payday loan. While they may resemble payday loans in many respects, the ultimate payback amount is significantly lower than that of payday loan companies. This is a service that credit unions offer their members.

There are also organizations that work to educate consumers and help them avoid making decisions that will increase their financial problems. One site that has a lot of information is the Consumer Federation of America’s PayDay Loan Consumer Information found at http://www.paydayloaninfo.org/. The site covers several topics including how payday loan companies are regulated by each state, the facts about payday loans, research, assistance, and a calculator that can help consumers determine how much a loan will really cost.

If you feel that a payday loan is the only choice you have, take a look at Consumer Affairs (http://www.consumeraffairs.com/finance/payday.html). You will find complaints about many companies that might help you navigate the treacherous waters and find a company that is less destructive than others.

If you are in the kind of financial trouble that is overwhelming, there is nothing worse than taking out a payday loan. If, after reading this, you still not not understand why you should avoid payday loan companies, you’ll understand once you’ve done business with one.

Although federal loans are lower interest, ten percent of borrowers still default on their student loan payments. Not only do these individuals suffer the consequences of poor credit ratings but also they remain on the hook for what is owed and more. Lawsuits may result, with additional fees due for court costs. Wages can be garnished and tax refunds forfeited until the loan is repaid. Social security payments can even be partially withheld.

Federal loans, however, are easier to modify and are more forgiving than private alternatives. Interest may be suspended during deferment periods, for example, or payments reduced during times of economic hardship. Options exist to restructure existing installment plans to longer terms as needed. Loan assistance is also available to qualified public employees. Members of the military are granted deferment while serving and six months post service. Because of these provisions, prospective college students are always encouraged to obtain federal loans before other forms of funding. Likewise, it is also recommended to request modification before resorting to default.

For private loans, the consequence of non-payment is even greater. Interest rates may vary with no recourse. When penalties and repeating fees kick in after a delinquency, the amount owed could easily be three times what was originally acquired. As bills continue to mount and eventually become overwhelming, many adults file for Chapter 7 or Chapter 13 protection. One of the most common misconceptions about bankruptcy, however, is that it will eliminate all debt including student loans. With recent laws in effect since 2005, it is almost impossible to alleviate such obligations. Since many alternative loans are also federally guaranteed, wages may also be garnished along with tax refunds.

The bottom line is monthly payments for student loans must be made regardless of a current financial situation. An undergraduate borrowing $100,000 dollars who decides to renege will eventually wind up shelling out more than half a million through a 30-year repayment plan. Continually make installments on student loans or it will cost far more in the long run.

Before applying for bad credit loans, be sure to get your free FICO Credit Score so you can feel empowered and know exactly what lenders see when they run a credit check on you.

Secured Credit Loans

These loans come in several forms. Secured credit cards are the safest way to rebuild a low credit score. Since they are backed by the borrower’s own money or assets, most banks will offer financing to them, however they are typically limited to a few hundred dollars so that they can ensure that they get paid back.

People with the lowest, most desperate credit ratings may not be able to find any other loans with bad credit until they have begun to rebuild with a secured credit card. These people should approach their own bank first to examine policies for getting a card of this type. Wells Fargo, however, is the leading bank to offer, and approve a secured card. Between their fair interest rates and limited fees and the fact that they will take clients with tumultuous credit histories, they are the best starting place.

Where to Find Loans for Bad Credit

Others, whose have credit history that is less troubled, may still be able to seek a loan for the purchase of a new vehicle, a home or even a start-up business. People with scores lower than 620, are considered subprime by most lenders. In such cases, the client can either seek to improve his or her credit (and this may take years) or find a lender who will work with what he or she has. The best subprime lenders are CitiFinancial, CitiMortgage Inc., and PHH Mortgage (formerly known as Cendant Mortgage).

PHH offers their qualifying clients with competitive interest rates on home loans, varying between 11.5% and 14.5%. They have been one of the leading home loans companies in the nation for over twenty years. Because of the large size of the lender, they can take on higher risk clients to finance a home for most credit conditions.

CitiFinancial and CitiMortgage are both subsidiaries of the main CitiGroup. Because the company was so devoted to working with clients in credit crunches, when the economic crisis fleshed out, their way of business was challenged. Fortunately, the struggle subsided and Citi is recovering. They are still among the largest lenders in the nation with trusted portfolios and competitive rates for most people.

Why Choose an Established Financing Company?

An established name is the most important factor in selecting a company to furnish loans for bad credit. While individuals with scores in excess of 700 should be able to find affordable loans with rates as low as 4.7%, clients with rougher histories should expect interest hikes between 7% and 12%. Any company that intends to charge more than 16% on a home loan should be avoided. High interest rates will both serve to make loans impossible to pay off and eventually cripple the holders into a no-pay, no-win situation.

Established names in the industry that offer loans with bad credit can be trusted to offer fairer interest rates. Also, like CitiGroup, if they are challenged by economic crisis, these vast holdings stand a better chance of keeping solvency. If the loan company vanishes, the loan holder has nothing to guarantee his or her assets.

Finally, established financing companies help you avoid companies that use hidden fees, exorbitant interest rates, or even scam you out of your money.

The company offers computer layaway plans to a primarily low-income customer base, and offers Blue Hippo financing for the layaway and to ship a computer to customers after 13 weeks, depending on the payment history of the customer. If the customer has a pay record that is not favorable, then for a $99 sign-up fee and a weekly payment of $36 to $88, the customer can have his computer after a full year – when the computer is completely paid off. This means that on the average, a customer is paying roughly $1,200 for a computer that it takes a whole year to pay for.

To be fair, the BlueHippo plan is not so different from many weekly furniture and appliance rental outlets – except that in those outlets, the customer is allowed to take the merchandise with him right away.

What the two methods of computer ownership have in common is the fact that at the end of the payment period, the customer has paid significantly more for the computer than he would have if he had saved his money over months and bought the computer through traditional channels. What is even more self-defeating is the customers are buying computers that have depreciated and have only 40 GB of hard drive memory. Therefore, the average customer is investing in an inferior product from the very start of a BlueHippo transaction.

What has been seemingly disturbing to the Federal Trade Commission (FTC) and the countless numbers of customers who have leveled complaints is many of the customers have reported never receiving a computer even after they successfully met payment terms. This is the main reason the FTC launched a probe in the first place.

In 2008, after intense FTC scrutiny, Blue Hippo agreed to reimburse customers who had never received their computers. The company was required to place $5 in an account for restitution. This plan would have been an almost perfect solution, had BlueHippo stuck to its part of the deal. After the 2008 exposure, though, the company went back to business and usual and continued to accept payments from customers without sending computers.

It was only after Blue Hippo discovered a second probe to monitor progress in 2009 that the company began to order computers that would go to customers. The FTC had discovered that in the year since the court-ordered injunction, Blue Hippo had only deliver one computer total to one customer out of the 35,000 customers who had entered an agreement for the layaway plan. In that one-year span, the company collected an estimated $15 million.

The FTC filed another injunction, and BlueHippo responded by order more than 4,000 computers – many of which went to customers who had not met the 13-week payment agreement. It looked to the FTC to be quite a reactionary response and not one filled with good will.

Blue Hippo had also failed to submit a required report to the FTC based on the original court order. A judge fined the company $2,500 per day until the report was filed. Blue Hippo submitted a report after five days, but the judge considered it so shoddy, that he placed an additional $5,000 per day fine on the company to submit a proper report.

In November 2009, after a very tarnished reputation, excessive fines and a bank account that was frozen by the FTC, BlueHippo filed for bankruptcy. Company leaders have said they believe the move by the government to freeze assets is unlawful and such a move prevented them from repaying both its 50 to 99 creditors and the customers who had been left with no computers. Blue Hippo has listed its assets as being worth between $10 and $50 million. Across the country, approximately 4,154 complaints have been filed with Better Business Bureau locations in different states.

Despite all the unfavorable publicity, Blue Hippo is still maintaining that it plans to “restructure” the company as quickly as possible. Restructuring could mean several different directions for the company. Its operators could choose to start another company under an entirely different name. It could modify its program offerings to change how participants receive computers.

Blue Hippo could come up with a legitimate complaint and recovery process for its customers to help ensure they get what they have paid for. Such a plan would be nothing less than honorable, if indeed the company is able to salvage its assets and reputation following the injunction and seizure of assets. The world will have to wait and see if this setback is permanent or a necessary way to make sure everyone who pays for a computer receives a computer.