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You don't have cash in the bank and you don't have it stopped in the mattress you may be running short and wondering -- get a cash advance.
-- -- get on your paycheck.
Actually in today's take charge consumer protection segment.
We want to warn you about the risk associated with so called pay -- loans and the best way to get emergency credit.
Joining us now -- rice and vice president of state policy at the Center for Responsible Lending that's what we're looking for -- writer great to have you on the program.
Good morning Jamie thanks for having me -- -- -- -- haven't heard a payday loans but they must be particularly proper are popular rather right now.
Sometimes not proper so what he wants to know about them.
And the first -- really a payday loan is marketed as a short term.
Small dollar loan that's meant to get borrowers.
To through their next -- facing a financial emergency.
It can seem like a quick fix the payday -- certainly marketed as a quick fix.
But what we've learned is that it's anything but but that.
The average annualized interest -- for -- alone is 400%.
-- you risk half a key states have so called usury laws.
I remember at one time was like 25% was the Max you could charge.
Well that's true and historically that's been true it when the declaration of independence was signed.
All the signers of the declaration went back to it to states that had -- -- -- that had interest rate limits but over the years particularly since the seventies.
Many states not all that many states of legalizing that -- -- specifically went into -- states.
And got legalization of four -- percent to sounds like make loans are -- Sounds like loan -- but.
Well I would say obviously the collection tactics can be different but the rates are very much the same and in fact.
-- there was some indictments in Chicago.
Some loan sharks a couple of years ago.
And they actually charge less than what heading lenders were charging a consulting right now save you getting your paycheck in a week or two weeks -- you need to cash right now is there way to do this that's safe what would be your top two tips for checking it out.
Well there's a couple of things I mean it.
And by and large for people who are paycheck to paycheck who have minimal savings facing a financial emergency.
They can't pay a 400% -- back all in one big lump sum -- lump sum.
On their next -- plus pay all the regular bills they still have -- the -- he is still have food so what should do what.
They should look for a longer term installment -- something like a credit card and overdraft line of credit.
-- signature loan from a credit union -- -- -- of family member or friend.
Anything but a -- wonder.
Because what we've seen with the 400% interest rate loans is that.
It invariably leads people to a long term cycle of.
Of high cost interest -- -- bigger problem I have to leave it there but let me ask you if you June encounter a payday lender are reserved place to check -- -- to see if they're legit.
Well I mean so from our perspective a payday -- is a pity -- is a -- loan.
And it -- shopping by -- company we don't see very we see very little variants by.
By term by cost they all.
When you look at the states they'll charge the maximum rate they're allowed by law -- -- -- -- a lot of variation Clarence did you use this is where.
Are often but I know the consumer financial protection board is actually looking to maybe regulate this in -- in the -- time.
Take charge folks look at all your options this one shouldn't be at the top of the list.
I think you're right thanks so much for being with us today for our take charge consume protection segment.
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