Truth in Payday Lending: How Shady Lenders Turn Car Trouble into Big Bucks

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For folks who drive, car trouble is a reality of everyday living. This is especially true for low-income families that have to share one car between multiple drivers. Viable transportation for getting to work and getting kids to school is a necessity, and unexpected expenses to keep the car running can be a source of financial stress. For M. Figueroa, of Orlando, Florida, her emergency car trouble left her scrambling for cash to make the repairs she needed so she could get back to her regular routine.

She found the funds she needed at one of Florida’s many payday lenders; in Figueroa’s case, it was Advance Loans. To get her car running again, she needed $500, a sum that Advance Loans was all too happy to offer. And she had two weeks to pay it back. Little did Figueroa know, however, that she’d end up paying Advance Loans twice the amount she borrowed, and for a lot longer than the original two-week loan term.

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Photo: Scurzuzu

Like so many other borrowers who find themselves in the debt trap that is payday lending, Figueroa had to repeatedly take out other loans in order to pay back her initial loan of $500.

She had to renew that original loan eight times and has paid more than $550 in fees alone, which does not include the principle loan amount. Luckily, Figueroa was able to finally pay her loan back, and she currently has no outstanding payday loans still waiting to be repaid. But, to get there, she had to shell out way more than she would have had to with a more affordable and fair lender.

Currently, the Consumer Finance Protection Bureau (CFPB) is considering the adoption of a rule that would keep lenders like Advance Loans from fleecing people in situations similar to Figueroa’s. Help us fight back against predatory lenders by voicing your support for the CFPB rule.

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