While title, payday, and internet loans may be necessary for emergency money needs, they’re expensive. Would you pay $750 for a TV that was selling for $500? That’s what you dong if you borrow $500 and end up paying back $750. Before you sign, take a close look at how much you will end up paying and ask yourself “Is it worth it?" The less you borrow the less you’ll have to pay back – don’t let them talk you into taking more than you really need.
Before you sign, be absolutely sure you can make all your payment on time — not “I’m pretty sure” or “No problem if I get some overtime and my car doesn’t break down again.” Miss a payment, bad things happen. Late fees for sure and you might be forced to borrow more money to pay off the first loan with interest and fees and that leads to a horrible treadmill, known as the “Debt Trap”. You may end up paying much more than the amount of the original loan and still owe money.
So payday and title loans are expensive and dangerous. Are there other choices?
Not Getting the Loan
Behind on utility bills? Call them and explain your situation. Most have assistance programs. Many creditors, even landlords, are willing to work with you if you stay in touch and make some payments. It’s expensive for them to go after you.
And you might be able to defer some expenses. If your car breaks down, can you get by a few weeks with car pools, buses, taxis or Uber?
What if you need money now?
Alternatives to Expensive and Dangerous Loans
- Don’t wait till the last minute. These alternatives may take some time to arrange.
- Check with local credit union to see if you qualify.
- Talk to your boss about getting an advance.
- Religious and community groups can help.
- If you borrow from friends or family best to put it in writing; folks tend to remember things differently.
- Pawn shops, garage and ebay sells are a good way to get cash and rid yourself of junk.
- There are many programs to help Vets and active military.
- If your need the money to fill a prescription, the druggist might be able to get you less expensive meds.
- If you are borrowing for an elderly relative, check with the local Council on Aging as there might be help.
IF YOU ARE RELYING ON LOANS TO GET YOU THROUGH THE MONTH CONSIDER BANKRUPTYCY, particularly if you are struggling with large credit card or medical bills. To see if bankruptcy is right for you, check with Legal Aid or with lawyers who do bankruptcy; many give free consults. Finally a few words about:
Their bark is worse than their bite. They cannot throw you in jail, they cannot call your boss or friends and tell them you are a deadbeat, they cannot phone you in the middle of the night and make threats, and they cannot attach your wages or bank account unless they have sued you and have a judgment against you. Even then they cannot attach your Social Security checks. If a bill collector has been doing any of that, bite back. Report abuse to the Arizona State Attorney General Consumer Complaint Division: www.azag.gov/complaints/consumer.
Of course they can sue you. If you get court papers don’t ignore them. Unless you respond, usually within 30 days, a default judgment will be entered against you, not only for the amount you owe but likely also attorney fees. Get legal help. Legal Aid is one source. Many local bar associations have a list of lawyers who will meet with you for 30 minutes or so for around $50. Well worth it!
We hope this has been as well.
Contributing Attorney Writer: Kenneth F. Hegland is a Professor of Law at The University of Arizona's James E. Rogers College of Law.