Sunday, September 14, 2008
Payday Loan Pitfalls
Attorney Carl Starrett was recently invited to appear on KUSI television's Good Morning San Diego show to discuss the risks of payday loans:
Payday loans are short-term loans where a borrower writes a postdated check to a lender who provides immediate cash, and the check is deposited on the borrower’s next payday. According to the California Department of Corporations, 1.4 million Californians took out payday loans totaling $2.5 billion. While California law limits the cost of these transactions to 15% of the face value of the check, the short length of these transactions means that the annual percentage rate on these loans often exceeds 400%.
Members of the military are often particularly vulnerable to payday loan predators because they have steady income from the government and often with little to spare. At deployment time, members of the military are often hit with unexpected expenses.
Payday loans and other types of short term loans should be used sparingly, if at all. Before applying for a payday loan, consider more traditional and less expensive lenders such as a credit union or other local financial institution.
If you have been the victim of a predatory payday loan or simply see no way out of your financial struggles, consider contacting a member of the National Association of Consumer Bankruptcy Attorneys for further assistance. If you are in San Diego County, please contact us for a free consultation.
About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.