Updated: 2/08 8:03 pm
You may not need to take out a loan if you get a hefty tax return, but that's not the case for everyone. About 8% of Texans have taken out a payday loan in the last five years, and this quick money can have big downfalls.
In 2008, the Federal Trade Commission warned that some of the fees on short-term loans can add up to 650% interest. Some of the loan companies are out-right scams and others operate legitimately. The main problem is that the loans are easily rolled-over and consumers find themselves in greater debt. The fees and interest rates did prompt the Federal Government to take action in 2006 Congress banned lenders from offering payday or car title loans to members of the military. The FTC advises consumers to consider alternatives to payday lending if they need money fast, including small bank loans, credit counseling and credit cards.
For those having no choice, to apply for such a loan start with a trusted company you have checked out with the BBB. Never pay an up-front fee limit the amount you borrow read the fine print and keep your documentation.
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