Payday lenders are a common sight in Florida, with a loan office seemingly at every other corner. Many residents take advantage of these fast, easy ways to get money when they are strapped for cash. However, borrowing from payday lenders might create more problems in the long run, for numerous reasons.
The Tampa Bay Times reports that a bill was approved at the start of the year, which if passed would allow Florida payday lending companies greater freedoms. Currently, residents can borrow up to $500 and are expected to repay the loan within 31 days. The new law would raise potential loans to $1,000 and give borrowers up to 90 days to pay them back. While those in support of the law say that payday loans are a good resource for people who have no other borrowing options, consumer protection groups claim the high interest rates and fees associated with payday loans are predatory and harmful.
In fact, claims CNBC, the Consumer Financial Protection Bureau warns that over 60 percent of people who use payday loans will end up rolling over their loan numerous times, ending up paying more in interest and fees than the amount of their loan.
Payday loans may seem like an enticing option for those who need money right away and have poor credit. This type of loan might be effective for someone who borrows a small amount and repays it quickly without borrowing again. However, consumers should be warned that if they are not careful, the promise of easy money can turn into a never-ending cycle of debt.