Their stories are amazingly consistent. They go to payday lenders out of a short-term need for cash and end up caught for months, even years, paying big fees for small loans without being able to pay them off once and for all. Driven by the fear of bounced checks or by the false threat of prosecution, payday borrowers are forced to pay the loan fees before they pay basic living expenses-like rent, mortgage, electricity. even groceries.
“At the time it seems like the way out, but this is not a quick fix. It’s like a ton of bricks.” Sandra Harris, once a Head Start student, now a well-known and respected member of her community, worked diligently to keep up with her bills. In a tough time, she turned to payday lending. She couldn’t pay it off, so she took a loan from a second lender. She was paying over $600 per month in fees, none of which was applied to her debt. Sandra was evicted and her car was repossessed.
“As soon as you get your first loan, you are trapped unless you know you will have the 300 extra dollars in the next two weeks.” Lisa Engelkins, a single mother making less than $8 an hour, paid $1254 in fees to renew a payday loan 35 times. Lisa thought she was getting “new money” each time, when Fredericksburg bad credit payday lenders in fact she was simply borrowing back the $300 she just repaid. She paid renewal fees every two weeks for 17 months to float a $300 loan, without paying down the loan.
“I felt like I was in a stranglehold each payday. After awhile, I thought, ‘I’m never going to get off this merry-go-round.’ I wish I’d never gotten these loans.”
Anita Monti went to an Advance America payday lending store in hopes of finding a solution to a common problem — how to delight her grandkids on Christmas. Her response to the payday company’s offers of help ended up costing her nearly $2000 and many months of emotional turmoil.
“I needed the cash to get through the week. It didn’t cross my mind that I was borrowing back my own money.”
Arthur Jackson,* a warehouse worker and grandfather of seven, went to the same Advance America payday shop for over five years. His total interest paid is estimated at about $5,000 — for a loan that started at $200 and eventually increased to a principal of $300. Advance America flipped the loan for Arthur over a hundred times, collecting interest of up to $ for each transaction, while extending him no new money. His annual interest rate was in the triple digits. Arthur fell behind on his mortgage and filed bankruptcy to save his home.
“In five months, I spent about $7,000 in interest, and didn’t even pay on the principal $1,900. I was having marital problems because of money and didn’t know what to do for Christmas for my kid.” Jason Withrow, as quoted in a account by Russ Bynum of the Associated Press.
Petty Officer 2nd Class Jason Withrow injured his back and lost his second job as a result of a car accident in . During a rough patch, the Navy nuclear submariner took out a payday loan. He ended up going to multiple lenders — for seven loans all told — to pay the repeated interest fees on his initial advance. Jason’s initial loan was for $300.