Get Consumer Federation Of America (cfa) Surveyed A Sample Of Twenty Internet Payday Lender Websites

Borrowers don't need to have a perfect credit score to get a payday loan – in fact, many payday lenders don't even check your credit score!

The federal government regulates payday loans because of: (a) significantly higher rates of bankruptcy amongst those who use loans (due to interest rates as high as 1000%); (b) unfair and illegal debt collection practices; and (c) loans with automatic rollovers which further increase debt owed to lenders.

Explanation: In interpreting the cartoonist's stance on payday loans, the most accurate understanding would be that c) They can trap individuals in a cycle of debt. Payday loans often come with extremely high-interest rates and short payback times.

Reasons to Avoid Payday Loans Payday Loans Are Very Expensive – High interest credit cards might charge borrowers an APR of 28 to 36%, but the average payday loan's APR is commonly 398%. Payday Loans Are Financial Quicksand – Many borrowers are unable to repay the loan in the typical two-week repayment period.

The quick turnaround time on payday loans is part of why they're so hard to repay, says Clark. Chances are, if you're short on cash when you borrow, you'll still be short on cash two weeks later when you have to repay the loan in one lump sum plus the interest you owe.

A: Single-payment payday loans are unaffordable and harmful for most borrowers. The repayment periods are too short, the required payments are too large, and the annual percentage rates (APRs) are 10 times higher than traditional interest rate limits set by states.

Twenty-One States and the District of Columbia Prohibit Extremely High Cost Payday Lending. States protect their citizens from usurious payday lending by prohibiting the product or by setting rate caps or usury limits.