Payday Loans In Pennsylvania
Payday loans are a form of predatory lending that is offered to consumers who often have few other avenues to acquire credit. While payday loans may seem like a quick way out of a financial bind, they often mean the consumer is trapped in what may become a repayment nightmare because of the high interest rates and applicable fees.
Payday loans are short term loans that generally become payable on the borrower’s next payday after taking out the loan. The cycle of debt is started when the borrower cannot make the entire amount of the loan, the principal and interest, in the short period of time. The amount the borrower does not pay when the loan is due earns more interest that is then due at the next payday. Because the borrower is paying off the loan, he has less money to meet other financial obligations and therefore needs to borrow more money or fall behind on other debts.
Pennsylvania has some of the strongest protections for consumers when it comes to payday loans. In Pennsylvania, there are caps on the amount a person can be charged in interest and other protections which mean that lenders cannot charge the obscene interests rates that are characteristics of payday loans. Check cashing businesses are also specifically prohibited from offering payday loans. Some payday loan providers try to work around the strict consumer protection laws in Pennsylvania by offering loans online and having the consumers apply through the internet.
Online payday loan vendors are held to the same laws when they offer their services to Pennsylvania residents. Payday loans lenders do not always tell the consumer this, or provide information on the protections offered under Pennsylvania laws. The lender expects the consumer to keep paying without checking on their rights or the legality of the agreement on the payday loan.
In addition to the laws in Pennsylvania, the federal government provides additional protections to consumers, requiring lenders to not use unfair practices when dealing with consumers, and prohibiting certain clauses from being included in some consumer contracts. Therefore, even when a lender uses other means to try and go around the Pennsylvania laws, there are additional protections available to the consumers. Consumers in Pennsylvania should consult an experienced attorney to find out if they have a way out of a predatory loan situation.
Predatory lending situations can come in many forms, even in securing a mortgage from a bank. Consumers can protect themselves by looking out for certain warning signs.
Contact Us for Legal Assistance
Loans that are the result of predatory lending can set a consumer back financially in many ways, especially with an unscrupulous lender who has hidden fees and costs attached to the loans it provides. Borrowers who were subject to predatory lending or were forced to take on debt through coercive or high pressure illegal tactics may have a defense to paying the debt. If you believe you were a victim of predatory lending, contact an experienced Philadelphia predatory lending lawyer at the law firm of Louis S. Schwartz, Attorneys at Law.