Use Credit Consolidation Loan: When Stuck With Excessive Pay Day Loans
Posted by admin on August 19th, 2009 filed in Debt Consolidation
Pay day loans are among the most popular sources of financial stress for many people. Basically, these loans are short term loans which can amount to anywhere between $100 and $2,000. Unlike other loans, these loans are far much easier to apply for.
The online application process for a regular payday loan only takes several minutes. There is also no need to present some of your valuable assets as securities for the loan. Credit checks are no longer needed. You can get the money that you requested directly deposited into your bank account within an hour after you have submitted the application form.
The downsides however, are the high interest rates and the short repayment period. Because of these repayment terms, many people end up having sky high bills. It seems that the only way out is the use of a credit consolidation loan.
1. Opposing Views on Payday Lending
The state of Ohio recently implemented a new law that puts a cap on the interest rates for pay day loans. While some interest rates of pay day loans soar to almost 40%, Governor Strickland makes sure that his constituents won’t have lenders which will charge more than 28%. In response to the new law, Lyndsey Medsker, spokesperson for the Community Financial Services Association (CFSA) claims that the rate cap will ward off pay day lending companies in Ohio. “They would lose money on every loan,” she notes.
Medsker is one of the few people that are criticizing the new law. She says that the state lawmakers are not listening to the constituents. “People like the service; they appreciate the service,” she claims.
2. Payday Lenders as Loan Sharks
Contrary to the claims of Medsker however, Gail Meyers fervently pointed out that the implementation of the bill was right. She claims that she was a victim of pay day lending. Meyers was one of those who initially borrowed $300 from a payday lender. After two weeks, she paid the loan with a $45 interest. However, she then again got another loan to pay her bills. When she cannot repay the loan, she got another one and after two years, the $300 debt cost her $2,640. Now, she calls pay day lenders “legalized loan sharks who need to be regulated.”
Undeniably, things would have been better for Meyers if she got a credit consolidation loan instead of several pay day loans.
3. Why Consolidation Loans are Better
A credit consolidation loan may require a more tedious application process. You should also present your house, home equity, or your car as security for the loan. However, what’s good about these loans is that they have lower interest rates. When you use this kind of loan to pay for all of your existing debts, you can save yourself not just from the excessive interest rate but from excessive late fees and hidden charges.
Bill Faith, Executive Director of the Coalition on Homelessness and Housing in Ohio, agrees that pay day lending is definitely a financial opportunity that can bring about adverse effects to the lives of its debtors. “I think for most consumers who use payday loans, the absence of payday loans will save them a lot of heartache and money in the long run,” he says.
Learn more about how to consolidate debt loan at http://www.consolidatedebtloan-s.com/.