Payday loans are a type of loan that is generally under $500, has high interest and is short term. In this type of loan, the borrower gives the lender a personal check that is postdated, or they allow them to get an automatic withdrawal from their bank account. The borrower is able to get money, less the amount of the lender’s fees.
The check or debit authorization is held by the lender typically until the next payday. The borrower then has the option of paying back the loan and exchanging it for their original check, allowing the lender to deposit the check, or renewing the loan.
There are many problems with payday loans. Unfortunately, the loan term is extremely short and does not allow you to save up the money needed to repay it. These loans are very hard to pay back in full. Since most people are not able to pay it back in the short amount of time, they then have to renew the loan, which costs them more money in fees. In addition, the interest rates are extremely high, and generally charge 500% or more.
If you are in over your head with a payday loan company, you need our professional attorneys to help you handle your debt. For more information about your legal options, contact a Chicago bankruptcy attorney at the Law Offices of Stuart B. Handelman by calling 312-360-0500.