Ohio Payday loans are cash advances for consumers who don’t usually qualify for traditional bank loans. They are an easy source of emergency cash, but they also make it easy to get caught up in an endless cycle of debt. It’s important to know how Payday loans work in Ohio and how bankruptcy can help stop them from draining away a family’s financial resources.
How Payday loans work in Ohio
Payday loans In Ohio are no-collateral, short term “Signature Loans” for $1,000. and under. To qualify, a borrower takes the required personal documents to a Payday loan store and fills out an application.
- A loan store employee verifies employment and income.
- The consumer signs a promissory note.
- One Payday loan store’s online example: Loan amount $500 for 14 days, payback amount $629.79 ($500. plus 129.79 in finance charges.)
- That’s an APR of 676.76 percent.
- The customer provides a personal check payable for the loan amount plus finance charges.
- The check is post-dated to the date when the loan comes due. Or they must allow electronic access to their checking account.
- The consumer then receives a check or cash.
- When the repayment date arrives, the Payday loan store presents the post-dated check to the consumer’s bank for payment.
Getting caught up in a Payday loan cycle of debt
If a borrower doesn’t have enough money to repay the loan when it comes due, Payday loan stores will give them additional time. First they must pay an extension fee equal to the original finance charge.
In the above $500. example, the customer could pay $129.79 for each 14 day extension. They may request up to 7 extensions, and if they use all 7, their $500. loan would cost an additional $908.53 in finance charges. That’s in addition to the original $629.79 repayment amount for the first 14 days.
If the payday loan store presents the post-dated check to the borrower’s bank and there aren’t enough funds to cover it, the borrower would also incur bank overdraft fees. The Payday loan store might also turn the account over for collection, and in Ohio, a bounced check could lead to criminal or fraud charges.
There are many Payday loan operations in Ohio, so a consumer could go to each one for a loan. That could leave them owing multiple Payday loans with similar financial arrangements.
Payday loan stores also have online operations in Ohio that offer a $1500. maximum loan limit.
Bankruptcy can be a solution
It’s easy to see how Payday loans can trigger an endless stream of finance charges, interest, extensions, bouncing checks, overdraft fees, collections, empty pockets, and growing debts. It can be a cycle that’s hard to break, but in Ohio, bankruptcy may be a solution. Payday loan debts can be discharged, giving consumers a fresh start.
Contact us if you’re trapped in a Payday loan cycle of debts. You’ll feel a whole lot better once you understand how Payday loans work in Ohio and how bankruptcy can help.