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Do You Know The Dirty Financial Tactics Of Money Lenders?

by 1 Minute Payday Loan Content Writer
Whenever you are in need of cash urgently you are likely to ask help from to a friend or a family member. If your requirement can wait for a couple of days, you can apply for a loan from bank. Anyone who is averse to approach a relative to borrow money, applying for a loan is usually the preferred option.

Most of all the traditional financial institutions have very well-defined rules which they follow when lending to individuals. There are many banks keen to lend only to those who can exhibit their ability to repay www.paydaybuzz.ca back a loan. Individuals applying for a loan will normally have to produce their payslip, income tax notice and other documents to satisfy the norms of the bank. But there are several individuals who may not be able to meet the eligibility criteria of the banks. 

For such individuals there are hundreds of licensed money lenders who provide Short Term Loan such as payday loans to people who are unable to borrow money from other traditional sources. So, anyone who was refused loans by the bank can visit such money lenders and successfully get the cash they are in need of. In fact, such moneylenders may also lend money to an individual who has an undischarged bankrupt.

In addition to the benefits offered by the money lenders, there are several dirty financial tactics as well that they may follow. There are three primary tactics that lenders may use to trap borrowers in debt. Once you are aware about these tactics it will be easy for you to identify and avoid such predatory lenders who use them and help you save a lot of money and stress.

Of late, Payday Loans have been in the news a lot. In many countries, the lawmakers are continuously trying to strengthen the regulations on such financial products that are marketed to people who are unable to afford the unreasonable interest rates charged or short terms. Thus, understanding the tactics of the money lenders will help you confidently navigate your decisions which will have a lasting impact on your financial future.

Interest Rates And Fee

The very first debt trap tactic is the interest rate and fee charged by the money lenders. The average interest charged on a Short Term Loan deal such as payday loans is between 400 and 1,200% APR. This rate varies wildly depending on who you are borrowing from and where you live. The APR charged www.paydaybuzz.ca by the lender can tell you a lot about the money lender. Usually, a Payday Loan will cost between $15 and $30 in interest for every $100 you borrow. The average amount that can be received as payday loan is for $500. If the loan was repaid within the repayment term, which is usually a two to four weeks repayment period, it will cost the borrower as much as $620. The end cost of the loan may seem to be outrageous, considering that you are repaying it on time, making it quite difficult to achieve.

Short Terms

The next tactic is offering the loans for a short duration. It is not always easy to come up with additional income or savings. Everyone has a general idea about how much they earn and will take home each month and what their regular expenses are. So, when you apply for a Short Term Loan and have to pay an additional $100, it becomes next to impossible. So, that is what payday lenders are exactly counting on to make money. Majority of the payday loan lenders offer a repayment term of just two to four weeks, which is the average pay cycle for almost all working people. So, that’s a very short time to come up with the borrowed amount in addition to the interest and fees charged.

Rollover

In case high interest, fee and short terms were not enough to trap you in debt, money lenders have another tactic available. The tactic is rollover. It can be the most devastating blow to borrowers and to their www.paydaybuzz.ca financial status. There are many things that make a rollover dangerous. Money lenders will often provide a rollover in the form of a helpful service to borrowers. They will act as if they are providing you a favour by extending your repayment terms when you are unable to pay back on the decided due date. Such services should be avoided at all costs. This tactic will turn something that is advertised as a “short-term solution” into a “long-term debt problem”.

Understand these tactics and never fall prey to such money lenders.

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About 1 Minute Payday Loan Freshman   Content Writer

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Joined APSense since, June 16th, 2014, From Edmonton, Canada.

Created on Jun 15th 2020 08:50. Viewed 477 times.

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