If you’ve ever taken out a payday loan in Iowa, you’ve probably been lectured by everyone you know about the evils of these high-interest traps. For the most part, these people – whether they’re your family, friends, a lawyer, or even the government – are right. Payday loans can start a downward financial spiral that could potentially lead to bankruptcy or foreclosure. As a law firm that frequently helps Iowans resolve their payday loan debt and get their financial lives back in order, we strongly advocate that you try to find an alternative solution to taking out a payday loan. But if you already have payday loan debt that advice isn’t useful, and you’re probably sick of everyone telling you that you made a grave mistake. That’s why I am splitting up this post into two sections: first, for those considering taking out a payday loan; and second, for those who already have payday loan debt.
1. I’m considering taking out a payday loan in Iowa. What do I need to know?
A payday loan is essentially a cash advance on your next paycheck. Payday loan companies will lend you a small amount of money, and in return you will write them a check dated for your next payday. This check will be for the full amount of the loan, as well as an interest fee (which I will get back to in a moment). The allure of a payday loan is that it allows borrowers get their paycheck and pay their bills before payday. The problem, however, is that payday loans have EXTREMELY high interest rates. To get a $300 payday loan, for example, you may have to give the lender a $350 check. That’s $50 of your paycheck down the drain immediately. If you don’t have enough money to pay back the loan on your payday and that check bounces, your interest will build up quickly. Frequently, payday loans have ridiculously high annual interest rates, sometimes higher than 400%. For comparison, the interest rate of a credit card is rarely above 20%. You will also be charged by the bank if you loan payment check bounces, and you may not be able to pay other important bills as a result. The payday loan companies are ruthless – they will try to cash your check on your next payday no matter what.
Most people who take out a payday loan take out multiple throughout the year. As a one-time emergency option, payday loans could be – in theory – an adequate but not ideal solution to a financial problem. Very few borrowers, however, end up just taking out one payday loan. We urge you to explore every possible alternative option before getting a payday loan. If you have bills due before your next payday, consider calling the companies and people you owe and negotiating a new payment plan. Utility companies, internet providers, and landlords are often much more flexible than payday loan companies.
2. I’m quickly accumulating payday loan debt and I don’t know what to do. Help me!
This is where we come in. For years, Marks Law Firm has helped Iowans deal with their debt problems, and we’re ready to help you. Luckily, Iowa law has already taken steps to protect consumers from the trap of payday loans. For instance, did you know that online payday loan companies are largely illegal in Iowa? If a company is trying to loan you money online and they don’t have a physical location within our state, they cannot offer you a payday loan.
You may also be concerned about payday loan companies taking you to court if you can’t make your payments. While payday loan companies may threaten legal action, most of them cannot do so because of their national organization’s rules and regulations. Often, you can renegotiate a payment plan that will work for you. It all starts, however, with contacting us. Payday loan companies work within the fringes of the law, so you need to have a legal professional on your side. Attorney Ashley Zubal has helped countless Iowans manage their debt, and she can help you. Call today for a free consultation!