Posted on July 22, 2009 at 5:06 am How does credit counseling work for payday loans?

Posted on July 22, 2009 at 5:20 am First, how do payday loans push consumers into deep debt problems. How do payday loans work. Payday loans are easy to acquire. The only requirements to secure them are a valid ID, proof of employment, and a post–dated check. Payday loan companies require that the check be written out for the amount you want to borrow, plus a fee amount for processing the loan..but if the consumer fails to repay (in full) within the one to four weeks time frame--stiff penalties are slapped the consumer-usually a much higher interest rate.And credit counseling for payday loans comes in- to basically educate the consumers about them before they apply. Credit counseling encourages the consumers to reconsider their other options first.

Posted on July 22, 2009 at 5:23 am Credit counseling for pay day loans informs the consumer about the Truth in Lending Act too, where lenders are required under the law to disclose all terms of the loans that they are extending, it should also include items such as interest rates and finance charges--which are the top reasons why consumers end up not being able to pay back the loans.

Posted on July 22, 2009 at 5:24 am Who are the usual victims of payday loans?

Posted on July 22, 2009 at 5:29 am The usual consumers that run to credit counseling agencies for pay day loans debt are those consumers that struggle with meeting their daily financial obligations, the senior citizens or elderly, because they just rely on fixed incomes or social security. Another group that is easily victimized by payday loans are the youth, who can easily be manipulated and enticed .

Posted on July 22, 2009 at 5:32 am Salvador is right, and to add to his list, the members of the military too succumb to these loans. It is common knowledge that servicemen have low salaries so to augment the income shortage -even if they know that it's going to cost them even more, they bite into the trap anyway. And then there are the usual consumers who find themselves desperately in need of quick money to fulfill certain domestic obligations. 

Posted on July 22, 2009 at 5:36 am oh, i see, thanks for all the replies..and what do credit counselors tell the consumers so they can avoid falling into the pay day loan trap?

Posted on July 22, 2009 at 5:41 am Basically, credit counseling agencies advice consumers (this is before they apply for pay day loans to pay for other debts) to look for smaller loans from credit unions. They can also try to advance a paycheck from their employers...or consider negotiation with the creditors.