Cash Advance or Pay Day Loans Rip Offs!

Cash Advance or Pay Day Loans Rip Offs!

Hopefully no one reading this has taken part in this type of “loan”. Cash advance or pay day loan businesses are the biggest ripoffs in the industry and in my opinion should be banned from business! First off only lower income families will take part in this scam which means the rich is only taking advantage of the poor. Let’s take a look at how they work and the evil practices they take part in.

Most cash advance businesses will give you a cash advance for up to 14 days but charge you a fee for the advance. For example, if you want to borrow $100 until your next pay day you would have to pay a $15 fee for the service. $15 doesn’t sound like much unless you can actually do simple math. Borrowing $100 for 2 weeks and paying back $115 is basically an APR of 390%!!! In other words if you borrowed the same $100 every 2 weeks and paid the $15 fee each time you would pay $290 over the course of 1 year to borrow $100!

I have even seen some signs outside these businesses advertising borrow $100 and pay back $103. This sounds like a great deal but again it’s pay back the $103 after 2 weeks, which is basically an APR of 78%. Just think of the money that these people are making on this type of loan. Sure, they are lending money to less than perfect credit individuals but they would have to have a lot of “non paying” customers to make up for the difference.

These businesses pray on the lower class and uneducated people of our society. Sure, it’s a legal business but about as unethical as they come. There isn’t much we can do to prevent this type of corruption but we can educate our readers and hopefully keep some individuals from wasting their hard earned money.