That’s a huge problem, given the sheer volume of loans made. Research by the Pew Charitable Trust suggests about 120,000 payday loan applications are processed daily in the US. That’s more than 43 million in a year.
Many are illegal - and all represent the most expensive way to secure a loan next to a loan shark. According to the Daily O’Collegian of Oklahoma State University (6/30/14), a typical payday loan allows the applicant to borrow in advance against his or her paycheck, with a loan that is due in full usually in a few weeks (and presumably when the applicant’s next paycheck comes in). The reality is that many Internet payday loan applicants are unable to cover both the amount of the loan and the costs and fees incurred within the allotted time frame.
So they take out extensions. This now mushrooms into a spiral of debt and what are described as predatory fees and interest rates that can rise as high as 1,000 percent - not surprising when one considers that in some cases fees can be as high as $40 for every $100 borrowed.
Not all states allow payday loans. Those that do, usually require storefront operations with tight controls on the amounts of interest charged. Given the number of states implementing policy intended to crack down upon or more tightly control the online payday loan industry, there is a sufficient collection of operators who circumvent state regulations - or ignore them altogether. Those online payday loan lenders who flaunt the rules, make life tougher for the online lenders who follow the regulations to the letter.
Little wonder that loan applicants seek payday loan legal help when they get in over their heads. They may not have known that the loan service to which they are paying exorbitant fees and interest rates, are not even licensed in the state where the applicant lives.
Some states don’t allow payday loans of any kind, storefront or otherwise. New York is one such state. To that end, the State of New York Department of Financial Services recently unveiled a database that will help banks identify and stop illegal payday loan activity. Typically, a payday loan provider will require banking information from a loan applicant, in order to facilitate the withdrawal of interest payments and other related fees.
The database and accompanying basket of tools will help banks identify illegal Internet payday loan operators, with an eye to shutting them down and preventing the bank’s clients from getting fleeced.
The Bank of America is the first bank to sign on to the program, said New York Governor Andrew M. Cuomo, in a recent statement.
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New York has joined many states in various efforts to shut down illegal Internet payday loan operations. Most loan applicants stuck with predatory interest rates are not aware that the entity to which they are paying exorbitant fees was not licensed to make that loan in the first place. Thus, installment loan legal help is often a wise course of action to recover those illegal fees and payments.