Payday loan centers are popping up all over the Chicago area as an attractive option if you need cash fast. Typically, you don’t have to go through a credit check or put up collateral (like the title to your car). The thinking goes something like this: you are strapped for cash and just need some extra money to get you through until you get paid at work. You get a payday loan and pay it back once you get your paycheck. Sounds simple, right? It is, but there are consequences you need to consider.
Getting money from a payday loan is easy. Paying it back is where it can get tricky since the interest rates are usually far higher than rates on a more traditional loans. They are usually not expressed as an interest rate but rather as a set fee. If its not repaid, the lender may deposit a post dated check from you, access your bank account, or give you the option of rolling it over (pay later) for yet another fee. Before taking out any kind of loan, you should have what I call an exit strategy. First figure out how will you repay it, when will you repay it, and how much is it going to cost you. Often, you have to give a post-dated check that the payday lender will later cash, for a greater amount than what you borrowed. Which means that of your future income – you will have to kiss a chunk of it goodbye to cover the loan plus the high fees. Can you afford it? Remember, you needed a loan in the first place because you didn’t have enough money whatever it was that you needed. Can you afford it now, plus the fees? In many cases the answer is no and people find themselves pushed even further in debt.
Depending on how much overall debt you have, Chapter 7 Bankruptcy could be the way to go if you are struggling with a payday loan. A Schaumburg bankruptcy attorney at O’Connor Cadiz Law can help you figure out your bankruptcy options.