First, you’ll discover the difference between good payday lenders and bad ones. And you’ll also discover how to negotiate with both so you can pay them off without harming your credit. And what’s more, you’ll learn how to get your financial affairs back on track as quickly as possible.

But first, let’s take a look at the payday loan industry just in case you don’t know what you’re dealing with…

Payday loans are unsecured, short-term loans with outrageously high interest rates/fees. If you think credit cards are bad, then consider Payday Lenders (PDL’s) charge 300% to 700% APR and up.

Even worse, these loans are designed to keep you in debt. Amazingly, for most of these lenders, it’s their business model.

What’s unfortunate is most legislators will tell you that these loans “serve a purpose” in our economy. They say these type of loans “help” most folks get through a short-term financial hardship.

But all I have found is a long line of misery when it comes to payday loans.

Unfortunately, there are millions of people trapped by predatory payday lenders who are looking for payday loan debt help. Bottom line, if you’re reading this, and haven’t had the misfortune of being their victim then you should stay away from them at all costs.

So you know… payday lenders may be divided into two types – storefront lenders who typically take a check as security, and Internet lenders who sometimes skirt the law and abuse the ACH system of electronic debits and credits.

The ease of which these loans are approved is a real problem for the average family. It’s actually a mini version of the current mortgage crisis except this lending model is designed to cripple you with seemingly small fees spread out as long as possible. More and more cases involve distraught hard-working people struggling to manage numerous payday loans. Often the combined fees due are more than a borrower’s entire salary!

The simple truth is that many working families live from paycheck-to-paycheck. When they run into an emergency without adequate savings payday loans are seen as a temporary solution. However, they usually lead a family into a deepening financial debt problem.

Studies show that payday lending, also known as cash advance or deferred deposit, fail to actually help families solve their financial crises. Research reveals that 99% of payday loans go to repeat borrowers rather than the occasional user. These numbers just don’t support the “temporary solution” argument.

Obviously, payday loans rarely benefit borrowers and instead end up trapping hard-working families into a spiraling drain of money-sucking high-interest debt, fees and charges.

You write a post-dated personal check and exchange it for cash from the lender. But payday lenders typically allow you only 2 weeks for repayment. Many folks have a problem coming up with the cash in such a short-term (think loan sharks) and this is where the problems start.

Without money to pay the loan in the bank, and the payday lender’s possession of a signed check or contract, a borrower is over a barrel worrying about inadequate funds and non-sufficient funds charges.They may also worry about defaulting on the small loan and getting a strike against their credit rating.

At this point the borrower will usually agree to renew the loan and pay the interest/ /rollover/extension fee. Of course, the payday lender is more than happy to oblige. This is where they make the majority of their money.

So the lender either keeps the same loan outstanding, or reopens it in a back-to-back transaction. This is how hard-working people get trapped in a cycle of high-cost debt with no end in sight. They are forced to pay the interest every two weeks to avoid default, often for months and even years. When you consider a typical loan of $325 (with an APR of over 400%), the interest is typically $52 every two weeks, or $104 every month.

Recurring fees like this are the lifeblood of the payday lending industry. A 2003 study found that people with five or more loans every year accounted for a whopping 91 percent of payday loans. Also, a University of North Carolina study found that the success of these lenders relied on their marketing ability to attract folks who would become repeat borrowers.

Another disturbing fact is that an estimated 22,000 payday loan shops are located near military bases and in African-American neighborhoods. These shops are obviously taking advantage of families who are perfect candidates for their marketing model of repeat loans. In fact, it is estimated there are more than 15 million working families caught in their web of high debt in these areas.

Julian Bond, chairman of the NAACP says this, “The NAACP is dedicated to eliminating payday lending, because wealth-building and saving for the future are vital to the economic success of communities of color.”

Also, the Department of Defense announced that payday loans were a top ten issue effecting the quality of life of U.S. military families. The New York Times reported that at least one fourth of military households (26%) have been caught up in payday lending. And Admiral J.L. Johnson, a former member of the Joint Chiefs of Staff, stated in a Consumers Union report, “There can be no question that military families are among the ‘targeted group.’”

At this point let’s discuss the difference between a good payday lender (PDL) and a bad PDL. A good PDL will allow you to make arrangements to pay off the principle so you can begin to hack away and see some light at the end of the tunnel. A bad PDL will refuse to negotiate. They will only accept payment in full or a rollover/extension.They will also hit your account with out notice, charge you NSF fees and generally harass you constantly about payment.

Despite the fact that payday lending is illegal in fourteen states many of the Internet PDL’s skirt the laws using  partnerships with out-of-state banks. They also use this rent-a-bank model to avoid interest rate limits in states where payday lending is legal.

For a good example you can look at Texas where payday lending is legal. However, Texas also has the highest number of rent-a-bank shops in the country allowing out-of-state lenders to charges in excess of the triple-digit interest rate limit in Texas.

The big question is “Why is this all legal?” That’s a great question. But since, for some odd reason, these so-called “lenders” are still in business, the only thing you can do is fight them with the laws that were meant to remedy these predatory loan practices and give you payday loan help.

The simple fact is:

• They can’t get you thrown in jail.

• They aren’t going to show up at your home.

• They can’t get you arrested.

• No one will show up at your place of employment.

In fact, they really can’t do anything at all except harass you on the phone and run up unnecessary NSF charges at your bank…

And you can stop them from doing this too.

So don’t worry about it and get a good night’s sleep.

YOUR NEXT DECISION

The thing to ask yourself is, are you struggling to provide for your well-being due to Payday Loans? If you are having trouble paying for food and shelter and meeting the basic needs for yourself or family then
you need to take action. The simple fact is there really is no way you’ll ever get out of their debt-trap unless you pay them off either in one payment or through negotiation.

So, the first step is paying them off in full.

Look at each loan you have. Itemize how much you owe (according to them) and how much you’ve paid in extension/rollover and any NSF fees.

This should get you mad enough to take action!

Now that you have this ammunition in hand you have several choices on how to proceed:

1) You can find a rich uncle, friend, or other relative to loan you the money you need to pay off these shysters in full and rid yourself of them once and for all.

2) You can get a decent, reasonable, low-interest loan from an outside source to pay them off. (to increase you chances of approval show the “white hat” loan company how you can easily pay them compared to how you’re getting ripped off with high fees from the PDL’s you should have a good chance at getting approved)

3) You can shut them all off completely and start negotiating payment arrangements.  This is the most drastic step. But if you are dealing with multiple loans, are struggling to make payments, and can’t pay for your basic needs like food, mortgage/rent, etc, then it’s time to get your finances under control and stop the insanity.

If you’re struggling with payday loan debt and are looking for payday loan debt relief then a good place to start is StompingDebt.com. There you’ll find all the tools you’ll need to put payday loan debt behind you.