Predatory online loans like can have APRs of well over 300%. People end up paying several times the cost of the original loan without knowing it, leaving them with no choice but to file for bankruptcy.
Queens, NY (PRWEB) April 24, 2017
A sudden need for money, like an unexpected medical expense, can lead people to seek a quick source of cash. Online lending services have been eager to fulfill this need, offering fast loans without a credit check. But these loans often come with a slew of consequences, such as high interest rates, hidden fees, and contracts that drag out payments. Bruce Feinstein, Esq., an experienced bankruptcy attorney in New York, recently began advising clients about the dangers of online lending companies and possible red flags.
Fast, no-credit check loans are often high interest loans, and the full costs of the loans are often not shown in their advertisements. Many companies will spread out the minimum payments for their loans to make them look cheaper, but these will take longer and cost far more money in the long run. “Predatory loans like these can have APRs of over 300%,” explains Mr. Feinstein. “People end up paying several times the cost of the original loan without knowing it, leaving them with no choice but to file for bankruptcy.”
Another trick to look for is an offer to rollover a loan. Companies may charge a fee to allow the borrower to continue owing a balance on the loan after the repayment date. This may sound like a way to buy more time, but in reality it’s a tactic for an online lender to get more money. Multiple rollovers can lead to hundreds of dollars in extra fees and no relief.
Fair and equal access to credit is imperative, and some online lending agencies instead take advantage of a customer’s desperate situation. There are some protective laws in effect – for example, the Military Lending Act protects active duty members from being charged interest rates higher than 36% on most consumer loans, including payday loans. “Consumers need to set similar limits on interest rates they will accept so they can avoid these predatory loans,” says Mr. Feinstein.
Online lending services may also promote quick access to cash by connecting directly to a customer’s bank account. However, the intent is often malicious; the companies will withdraw repayments for their loans, putting customers at risk for overdraft fees and setting them up for even more financial hardship. And if a customer does loan payments on time, he or she may get a follow-up offer refinance the loan, setting them up for even more risk.
A key factor that is often overlooked with these types of online lending services is their inability to work with struggling customers. Many people have little recourse if they run into trouble paying off a loan. Many online lending companies are not regulated, allowing them to promote unfair business practices. “Banks are usually open to working with credit counseling services and their customers,” says Mr. Feinstein. “But online lenders are nowhere near as helpful when it comes to working with customers on other solutions like debt consolidation.”
The Law Offices of Bruce Feinstein has nearly two decades of experience in bankruptcy law, helping clients and families resolve their issues and move forward with their lives. Visit bfeinsteinesq.com for more information or call (718) 514-9770 to reach the New York office. ###