Payday loans?
April 15, 2006 11:00 AM   Subscribe

How do payday loans work? I need $280 NOW and there's no other way for me to get it. My car repairs cost more than I thought. I'm scared!
posted by miltoncat to Work & Money (22 answers total)
Try to get a credit card quick. If approved, they'll probably give you a temp # to use. Otherwise, find a friend/family member and beg. All of the fast cash places charge at least 20-30% in fees.
posted by SeizeTheDay at 11:03 AM on April 15, 2006

You might also see if you can work something out with the repair shop. Those fast cash places promote a cycle of dependancy for the reason SeizeTheDay mentions.
posted by Good Brain at 11:07 AM on April 15, 2006

Those payday places all just got kicked out of North Carolina for what amounts to usury. I would explore any other option first.
posted by BackwardsCity at 11:07 AM on April 15, 2006

You cant get overdraft on your chequing account and just pay the $20 for the overdraft when you get your paycheque.
I'd never want to get mixed up with those Payday Loans folks.
They ruin lives. Granted, most of those lives were headed for financial ruin anyway, but boy do they ever put you on the Express bus to bankruptcy.
I'd rather beg/borrow/whatever before stepping foot in one of those barely-legal loanshark offices.
posted by kevin_2864212 at 11:07 AM on April 15, 2006

Payday loans are even more dispicable then credit card companies, and that's saying something.

Here's what the FTC has to say about them:
Basically money now for an ungodly (literally, see what the bible says about usery) amount of money in the future.

I'd consider everything that StD said above, and I'd also ask if you had anything you can pawn.
posted by zabuni at 11:09 AM on April 15, 2006

While I agree that these places are pure evil, some people don't have the option of begging and borrowing from friends. Try your bank first-if you have decent credit, you can usually get a small loan at reasonable rates. And to answer your question, how payday loans work is that you bring in some proof that you have income and a bank account (paycheck stub from a previous pay period and a bank statement) and you fill out a form and they give you a loan that you agree to pay back with your next paycheck. Sometimes they ask for a post-dated check that they'll deposit at the agreed time. I've seen some places advertise that the fee for first-time borrowers isn't huge (the sign at the place down the street says"Borrow 200$, pay back 203$") but if you don't pay it back on time the fees will get insane. WHATEVER YOU DO, DO NOT put your car up as collateral- NO CAR TITLE LOANS. If something happens and you can't pay it back exactly when it's due, for whatever reason, they WILL take your car. I saw a friend lose a car worth about 15,000 for a 400 dollar car title loan.

It sucks to get in the kind of situation. Good luck, I hope it works out for you.
posted by cilantro at 11:18 AM on April 15, 2006

Can you explain your situation to the mechanic and pay the portion you expected? Maybe they would allow you to leave the car impounded with them for another 1 to 2 weeks, before you need to pay in full. Then you can defer paying your utilities and rent on time. Go to several friends and relatives and borrow $20 from each. Pawn something of value that you can handle losing (if you can't pay later). Apply for a credit card.
posted by acoutu at 11:19 AM on April 15, 2006

Just to add something to the "payday loans vs. loan sharks" comparison, there's an article by Slate that notes a mafioso was jailed for loan-sharking at interest rates about one third of what the payday loan places charge:
Now, 152 percent is steep by Citibank standards, but it's a sweet deal compared to the terms offered by the "payday loan" companies, which charge average APRs of nearly 500 percent for their very legal loans. Payday loan companies, which include such chains as ACE Cash Express and the cheerfully named Check Into Cash, operate like this: If a borrower needs, say, $200, he writes a personal check to the payday loan company for, say, $250, but postdates it to his next payday. The company gives him $200 and keeps the $50 as its fee when it cashes the postdated check on its day of reckoning. If the borrower's account is empty that day, the borrower must "rollover" the loan, that is, pay the operator another hefty fee to prevent the check from bouncing. Payday lenders routinely threaten habitual defaulters with check-forging charges.
Having worked in administration in the military, I can attest to how destructive these places can be. I saw plenty of non-judicial punishments meted out as a result of soldiers getting in over their heads from payday loan places.
posted by mph at 11:30 AM on April 15, 2006

Regulations vary state by state for payday loans. In Washington state, for example, you get charged $15 for every $100 you borrow, and you have to pay that all back by your next payday.

If you can prove you have a decent income and a checking account, you should be able to walk out with $300 cash today by writing a check for $345 dated for your next payday.

Payday loan places theoretically can provide a helpful service for people short on cash.

Here's something to ponder before borrowing the money this way, however: Will you be able to get by during your next pay period with $345 less in the bank?

Most people who use payday loans can't. So they wind up going back and borrowing more. It can become a recurring cycle, and it's really messy.

Even though it looks like you're only paying 15% to borrow the money, when you keep having to renew the loan you wind up paying a yearly APR of close to 400%.
posted by croutonsupafreak at 11:40 AM on April 15, 2006

Payday loan places prey on the fact that poverty and innumeracy are often to be found together. Many people don't realise that small-sounding amounts of interest, charged monthly, add up very quickly. Don't fall into that trap. As many have said, in a last-ditch situation (ie. after you've begged relatives, friends, the bank etc.), the pawn shop route is a better one.
posted by reklaw at 11:56 AM on April 15, 2006

Your employer or school (if you're a student at a major university) sometimes offer hardship loans for stuff just like this. Check with them, or your bank. Don't touch the payday places with a ten foot pole. Even pawning stuff is better.
posted by SpecialK at 1:15 PM on April 15, 2006

Even pawning stuff is better.

This should be repeated.
posted by grouse at 1:20 PM on April 15, 2006

Modest Needs? I don't know how quickly the process works, though. But yeah, don't go anywhere near a payday loan place. Borrow $20 or $30 from a dozen people if need be or pawn something if you have to, but stay away from the sharks.
posted by scody at 1:26 PM on April 15, 2006


Seruously. Pawn. Work another job. Soemthing.
posted by lalochezia at 1:39 PM on April 15, 2006

I worked at a payday loan company for exactly two days before I quit in disgust at their business practices. Seriously, don't get involved with them.

Pawn or eBay some stuff, call some friends or folks.
posted by Alvy Ampersand at 2:10 PM on April 15, 2006

Another vote for ANYTHING but payday loans.

Pawn something, or several things, that you can live without. You won't get near what you could sell the items for, but you get the money now.

If you can redeem the item in the 30 days, you can usually pay just the pawn fee to have them hold the item for another 30 days. Worst case scenario... if you can't pay back, they keep the item and sell it. So, be sure it's something you can live without, or at least you are willing to "trade" for your repairs.

(This is the kind of knowledge you gain when someone close to you has a gambling problem.)
posted by The Deej at 2:20 PM on April 15, 2006

That should be, "if you can NOT redeem the item in 30 days, you can usually pay just the pawn fee..."
posted by The Deej at 2:22 PM on April 15, 2006

Talk to your mechanic and see if they'll accept partial payment now. Maybe they'd accept a postdated check for the balance.

I had to go to Ace checking the other day to pay the electric bill (overlooked and near shutoff). They're really awful, they really prey on people and you should avoid them at all costs.
posted by theora55 at 3:04 PM on April 15, 2006

Ditto on trying to talk to the mechanic. Explain the sitch, try to pay in installments.
posted by radioamy at 3:52 PM on April 15, 2006

miltoncat, please send an email to the address listed in my profile if you decide to go through Modest Needs. I have a partner account there and am happy to help a fellow MeFite in need.
posted by onalark at 5:23 PM on April 15, 2006

what about a salary advance?
posted by elle.jeezy at 6:21 PM on April 15, 2006

First of all, I want to just tell you that I don't condone useing these places. Everyone before me has given you multitude of great reasons not to, and I agree with every one.

However - I have used a payday loan place exactly once, and while I felt like I needed to shower with battery acid and steel wool afterwards, only found myself $30 the poorer at the end.

I had decided, along with my wife, to move to a new house. The new landlord needed more of a deposit than I could really deal with on short notice, so I was trapped - stay in my crappy appartment with the bad neighborhood, or figure out a way to get through. I begged and borrowed - but was still short; most of my friends are just like me, and usually not broke, but not sitting on goldmines either.

With few options left, I finally went to the place. They were skeezy, very condescending, and humiliating. But, I got the small (< $200) amount of money i needed, and paid it as soon as i got my paycheck six days later. i had fourteen, but i paid it as quickly as possible to just be rid of it hanging over my>
So, be warned - this is a potentially slippery slope, and one should exhaust all potential options before deciding. If you do, be so f*cking dilligent about paying it back that you'd rather eat ramen/glass than not have it payed off.

Good luck. I know how much it sucks to be broke AND without transport.
posted by plaidrabbit at 9:22 PM on April 15, 2006

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