You may have been tempted before to apply for a payday loan. After all, the ads promise quick, easy money without having to have good credit. However, as we at the Law Office of Paul R. Idlas know, payday loans often lure unsuspecting borrowers in like a spider catches a fly. You and other Illinois residents should understand what these potentially predatory loans entail.
The payday loan concept is a simple one. You walk into one of the welcoming locations or apply online, and in minutes you can have several hundred dollars deposited into your checking account, provided you agree to repay the loan on your next payday. However, there’s a catch. The loan must be repaid in full, and the interest rate is usually astronomical. Since many Americans live paycheck to paycheck, it is all too easy to fall into the trap of borrowing money from a payday lender every paycheck just to stay out of the red – and keep paying the outrageous fees.
According to the Illinois Attorney General, a state law that passed in 2011 protects consumers from certain types of predatory lending and created a type of loan called the small consumer loan, which may also have a high interest rate but is considered slightly better than a traditional payday loan. Additionally, unlimited roll-overs are now prohibited in Illinois, and loans must be based on your ability to repay them.
As our debt relief page explains, when you are suffering from financial challenges, you have other options to consider before resorting to a payday loan.