About Predatory LendingPayday LendingAPR Calculator A payday loan is a small, unsecured, high interest, short-term cash loan. In most cases, consumers write a post-dated, personal check for the advance amount, plus a fee. The lender holds the check for the loan period and then deposits it, or the customer returns with cash to reclaim the check. Getting the loan: Borrower provides a pay stub and identification, then writes a post dated check to the payday lender for an amount to cover the loan and the fee. For example, if the borrower needs $300, they write a check for $345 and post date it to their next payday. If you get paid in 2 weeks, that's equivalent to 391% annual interest. Paying the loan: After two weeks, the payday lender cashes the $345 check and the money is taken out of the borrower's bank account, or the borrower brings cash in to buy back their check. How people get trapped: After two weeks, a borrower who cannot pay off the loan may pay the $300 to close the initial loan, then pay another $45 to take that $300 back for two more weeks. Two-thirds of borrowers don't have the money to pay off the loan when it comes due on their next payday so they pay more fees to take out the loan. Total bill for borrowing $300 for 8 weeks: $480.
Mortgage Lending Homeownership is a family’s most valuable asset and largest source of household wealth. However, in recent years, abuses in the subprime lending market offered a false promise of homeownership. Federal regulators failed to curb those abuses, setting vulnerable homeowners up to fail. As a result, many families with the most to gain from homeownership are losing their homes. The APPL coalition is sponsoring legislation protecting families by requiring lenders to consider loan modification as a foreclosure alternative.
Refund Anticipation Loans (RALs)RALs are short-term cash advances against a customer's anticipated income tax refund. But the loans are offered at high interest rates, ranging from about 40% to over 700% APR. Also, they speed up the refund process by as little as one week, compared to what consumers can expect by filing online and having their refunds deposited directly into their banking accounts.
Taken from the Center for Responsible Lending website:http://www.responsiblelending.org |