Payday loan lenders recognize that people with bad credit will never be able to obtain financial assistance or financial products from traditional banks. Lenders feed off of the desperate-for-quick-cash consumer with poor credit by lending them a short-term “payday” loan of $500 or less that has a high cost tacked onto it.

What Is a Payday Loan?

Payday loans get their name because they are mostly only used to help drift people until they receive their next paycheck on payday. The payday loan is required to be repaid in a single lump sum instead of monthly installments like a traditional loan or credit card payments. Due dates are also short-term—the lump payment is typically due within two to three weeks.

Why Payday Loans are Predatory

The predatory actions of a payday loan are baked into the terms and conditions—which are often ignored by the consumer. While the lender may require that they have authorization to electronically credit you for the loan, they may use the same method to remove the funds from your account in the case that you aren’t able to pay by the due date, even if you need leniency, which is common with those who have bad credit.

Bad Loans for Bad Credit

Payday loans bank off of consumer desperation, tacking on high-interest rates for those who have poor credit histories. For example, let’s say that there is a $75 interest tacked onto your $500 payday loan. If the due date is within two weeks, then the annualized interest rate comes to nearly 300%—and that is just on the low-end. It is very normal to see lenders tacking on interest rates that have an annualized interest rate of 500% or more.

Get Relief from Your Debt Spiral

People who take out payday loans will find themselves in a loop—you’ll get your payday loan, struggle to make on-time payments, other bills pile up, and you find yourself onboarding another expensive payday loan. Contact Progressive Debt Relief to help bail you out from this financial gridlock. We are pioneers in resolving payday loan debt by renegotiating interest rates so the debt can be paid off faster. To find out more about our services, or to schedule a complimentary consultation, contact us today.