Entry bubble The Pitfalls of Payday Lending

By: Nicole | August 22, 2008 | Category: Money

CashThe Gov Gab comment box has recently been flooded with spam promoting payday loans. Fortunately, we don’t post spam, but these messages gave me an idea for today’s topic.

If you gather more than five consumer advocates in any one location for more than five minutes they will commiserate about the pitfalls of payday lending. For cash-strapped consumers, a payday loan is one of the most treacherous ways to borrow money.

Here’s an example. A person borrows $100 until payday. The lender charges $15. The borrower cannot repay the loan on time, so the loan is "rolled over" for another two weeks with an additional fee of $30. Already, this person has spent $45 to borrow $100, and the borrower is not out of debt yet.

Most payday lending models actually intend to keep the borrower in debt indefinitely. More than 90 percent of these loans are given to borrowers who use more than five payday loans per year.

Payday lending is illegal in some states. Use this map to determine if your state has laws that protect you from payday lenders.

If you find yourself short on cash, look for alternatives to payday loans.

For more information about managing debt, read our publication on Financial Fitness.

Have you ever been solicited by a payday lender?

| View Comments [20] | envelope E-mail This Entry | Tags: bankruptcy   debt   finance   lender   lending   loan   loans   money   nicole   payday   predatory_lending  

 

Entry bubble Avoid Foreclosure Rescue Scams

By: Nicole | August 15, 2008 | Category: Home and Family

Mortgage PaymentsA few weeks ago, I wrote a post about avoiding mortgage foreclosure. I know that topic resonated with a lot of folks. In addition to other worries, homeowners must now be more guarded than ever against foreclosure rescue scams. The fear of losing their homes can make even the savviest consumers susceptible.

The Federal Trade Commission and the Office of the Comptroller of the Currency both provide general descriptions of the most common foreclosure rescue scams:

  • Lease-back or repurchase scams happen when someone offers to pay your mortgage and rent your home back to you. This scheme often involves signing over your deed to a con artist.
  • Refinance Fraud occurs when people pose as mortgage brokers and offer to refinance your loan so you can afford the payments. Con artists may trick you into signing over the ownership of your home by saying that you are signing documents for a new loan.
  • Bankruptcy Schemes attempt to abuse the bankruptcy laws. The con artist may even file a bankruptcy case in your name, without your knowledge.

Here are some general tips to help you avoid these scams:

  • Read and understand everything you sign.
  • Don’t sign blank or partially completed documents.
  • Make payments directly to your lender or mortgage provider.
  • Contact your lender directly to discuss payments and options.
  • Never sign over the deed to your house without consulting a lawyer.
  • Report suspicious activity to the FTC or your state consumer protection office.

For more information about housing, visit the USA.gov Homes and Housing Page. Do you have any other tips for avoiding foreclosure scams?

| View Comments [3] | envelope E-mail This Entry | Tags: bank   foreclosure   fraud   home   housing   lending   loan   money   mortgage   nicole   scams  

 

Entry bubble Late Credit Card Payment Lament

By: Jim | May 28, 2008 | Category: Money

Ever have a problem with a credit card? I just did. When I got my most recent statement, it showed that the previous month’s payment was late -- by one day! Unfortunately, I misplaced the bill in the mess I call a desk and got my payment in the mail a little late. Even though it was my fault my payment was late, I was still a bit ticked that the company charged me a late fee and had half a mind to cancel the card. Geez, I’ve paid off my balance in full and on time for nearly 20 years. Couldn’t they cut me just a little slack!?

angry manAfter I was done being mad at myself for being late, I realized that canceling the card wouldn’t be good for my credit history in the long run. The longer you hold on to your credit cards and make payments on time, the better. The point being, you want to develop a history of showing that you pay your bills on time. This shows lenders that you are a responsible borrower and a good credit risk. Which means you can get better interest rates on credit cards and loans. Many people erroneously think that it helps improve their credit scores if they cancel cards they’ve had for a long time and don’t use much or need, this is not the case. Check out consumeraction.gov for more tips on how to manage your credit.

The late payment probably is a minor negative mark for my overall history, but I’ll worry about it all the same. Of course, I’ll be visiting the Federal Trade Commission’s annualcreditreport.com web site soon to get my free credit reports from the three credit reporting agencies. I’m hoping (probably in vain) that my report won’t get dinged.

There are a few other things I need to do while I’m at it. Like clean up my desk, so my bills don’t get misplaced. Better yet, I should just set up my accounts to that they can be paid by electronic funds transfer. Has anybody else out there had a problem with a credit card?

| View Comments [15] | envelope E-mail This Entry | Tags: charge   credit   jim   late   loan   money  

 

Entry bubble Buying A New Hot Rod

By: Sam | January 16, 2008 | Category: Home and Family

So long Charlie, hello, Big Al. That’s right, I finally took the plunge and parted ways with my old car, Charlie. And even though parting is such sweet sorrow, I couldn’t be happier with my new ride.

Before I could buy Al, I had to first figure out what to do with Charlie. I weighed the pros and cons of trading in vs. selling, which included looking up Charlie’s value (priceless, of course) in the Kelley Blue Book. And after reading Nancy’s post, I also considered purple cargoing the donation route. For me, selling Charlie was the best option, because it added some extra money to my down payment.

Since I had been shopping around for a couple of months, I had a pretty good idea of what make and model I wanted. And after a quick assessment of how energy efficient this new car would be, my next step was to figure out if I could really afford it. To do so, I used Consumer Reports’ online calculator, which enabled me to play with different figures, including my loan term and interest rate.

Speaking of, a key step to my car buying process was researching my financing options and finding the best loan. After comparing rates and terms from multiple finance sources like my bank, credit union, and potential car dealers, I decided to go with a loan from my credit union. I did a quick check of my credit report through annualcreditreport.com, just to make sure all my info was correct, and then applied for the loan online. It really was easy as pie!

With my financing in place, I was now ready for the fun part: wheelin’ and dealin’. Armed with advice from the pub “How to Get a Great Deal on a New Car” and my Dealer Visit worksheet I was ready for business. I checked a couple of car buying sites to see what the going sale price was in my area and then I stared negotiating for the price I wanted and could afford. And before I knew it, I was cruisin’ around town in Big Al.

All in all, the entire process wasn’t as bad as I imagined. Feel free to add any tips or stories you have for our readers who’re thinking about buying a car as well.

| View Comments [3] | envelope E-mail This Entry | Tags: car   cars   credit   financing   loan   vehicle