While they may be easy to get, payday loans can really hurt your pockets in the long run, experts say.
JACKSONVILLE, Fla. — Running out of money is a scenario that many North Florida residents face every day. With unemployment rising and no federal benefits in sight, sometimes you have to do whatever you can to make it happen.
Although payday loans are considered a quick option for people who need cash fast, financial experts say there are consequences to this option.
“You have to be careful, these easy-to-get loans may never leave you,” said Charla Rios of the Center for Responsible Lending. It is an agency that alerts consumers on how not to fall into a trap.
“I hear it from a lot of people, they think the loan is temporary, but they just don’t know how much interest they might pay in the long run,” she said.
In Florida, payday loans are legal. Most temporary loans are for two weeks and borrowers can get up to $500, but the interest is over 400%. Often borrowers can’t repay the loan when it’s due, so they end up extending the loan and only paying the interest, but never the principal. This process sometimes repeats itself week after week after week.
“You have to be careful, it’s definitely a snowball effect,” Rios said.
But there is help. Experts say educate yourself on how you can survive and stay away from loans. The Consumer Financial Protection Bureau also has information to help you break.
But pundits like Rios said an abrupt break with loans was preferable. She said if you could just pay, try never to go back.