PayDay Loan Warning!

“I would like to think people don’t do this often - but I know there’s a need out there.” Payday loans must be popular. Different companies offer them all over Acadiana. But the better Business Bureau won’t certify them. Director Sharane Gott says that’s a nationwide policy. “Payday loans are an expensive way to fix a short term problem,” says Gott.

If you can prove you have a job, most payday loan companies will give you a couple hundred dollars at a very high interest rate. For example, to borrow $100 dollars you can be charged up to $20.12 in interest per state law. But if you can’t pay that money back in two weeks, a cycle starts with customers borrowing more money to pay back the original loan. “What happens is finance fees on finance fees - and you never got out,” Gott tells KATC.

We went to three different payday loan locations in Lafayette, no customers wanted to talk to us on camera. But we did hear stories of people even filing for bankruptcy after getting behind on their payday loans.

Here’s some advice for borrowers. If you can - borrow money from friends, or family members who won’t charge huge interest rates. Also - talk to your bank. They may be able to work out a small loan. “I’d like to see people shop for credit like they do anything else,” says Gott.

A payday loan industry group says their products should only be used for short term needs, not as long term solutions. Their website encourages customers to learn to budget, and it claims payday loans can be vital to working class families. Experts say using payday loans for Christmas gifts can be a bad idea. If you don’t have or want to use credit cards, some stores are offering lay-away. Sears announced today it’s bringing that practice back.

Louis David