Close

Don't Get a Payday Loan: Here's Why

If you’re struggling with debt and just barely scraping by, a payday loan can be extremely tempting. But we urge you to avoid this type of loan-also called a cash advance loan, check advance loan, post-dated check loan, and deferred deposit loan-whenever possible.

What’s wrong with payday loans?

According to the Federal Trade Commission, payday loans work by having the borrower write a check for the amount he or she is borrowing, plus a fee. The company gives the borrower the amount, minus the fee to the company. At the borrower’s next payday, the loan is due. If the borrower can’t pay, the lending company “rolls over” the loan and charges the same fee again.

Borrowers can quickly get in over their heads because of the astronomical fees that lenders charge. A $100 loan could have a fee of $15. If the borrower has to roll over the loan three times to pay back the $100, they end up paying $160. That’s nearly double the amount of the original loan!

The fees and interest rates charged with payday lenders are impossible to manage. The example above is conservative: some payday lenders have charged interest rates of 500 percent or more! This traps borrowers into a cycle of debt: many average 10 payday loans a year and pay $458 in fees-money that people with debt certainly need for necessities.

Fortunately, states across the U.S. have recognized that these practices are predatory and have cracked down on payday lending, according to the New York Times. According to the article, “New York authorities have ordered 34…online and American Indian lenders to stop providing online payday loans in the state…”

If you’re considering a payday loan, consider the alternatives. You may be able to borrow a small loan from a credit union or small loan company. You may also want to shop around for a credit offer with the lowest interest rate and finance charge.

If you’re having trouble making your payments, it’s probably time to think debt relief. You might want to try talking to your creditors about getting an extension on your bills or to a Washington credit counselor about your debt relief options. If you’re facing a significant amount of debt, bankruptcy is another option that may be right for you.


Client Reviews
★★★★★
Great service and follow up. Its a scary thing when you need a lawyer but Jason and his team make it less so. Very happy with our outcome. Scott Thibeault
★★★★★
"I can't say enough great things about Jason Newcombe Law Office. I am retired military and I highly recommend Jason Newcombe Law Office. I reached out to Jason's office after sitting for hours reviewing multiple Domestic Violence Law Offices in King County. He responded before that day was over. I spoke with Jason's both in-person and by phone; felt very comfortable with his years of experience and straight talk. He took on my case, took me through the process with sound advice. The Attorney Erin Lane who accompanied me with my court appearances; can't praise and thank her enough for her time, selflessness and educational information prior to each court appearance. She made a really daunting task for me less fearful, given such grim circumstances. I am forever grateful for Jason and the Team of Attorneys." Tommy Harville
★★★★★
"I cannot thank Mr. Newcombe and his staff enough. They are awesome. When I first contacted his offices, I didn't know what to do. I was overwhelmed and confused. He did an amazing job, I highly recommend him! I had two cases, and he got both of them dismissed. If you are in trouble, do yourself a favor, give him a call. " David
★★★★★
"I had Mr. Newcombe's firm handle my ticket and I greatly appreciate their assistance. It was handle easily and with good communication from the associates. If you need assistance with some legal matters then I would refer you to them. " Marvin
★★★★★
"Jason Newcombe and his Associate's are all top notch individuals who will fight tooth and nail for you and go the distance to ensure that you receive the best outcome possible on your case. I would not be where I am today if not for the Law offices of Jason Newcombe. " Eric Brandt
Contact Us