When you don’t have the money you need to pay a bill or several bills, why not go to the lender who makes it easy to get a loan? Why not? Because you will be paying a very high interest rate. Under the Truth in Lending Act, the cost of the payday loans, like other types of credit, must be disclosed.  Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis).  Consider that a $30 fee charged on a $100 payday loan for two weeks, would be 780% Annual Percentage Rate or APR. The same loan for one week would have an APR of 1,720.71%. 

Indiana’s maximum rate on a $100 is $15.00 with a minimum term of 14 days.  The APR is 390%. 

What are the consequences of a Payday Loan?

 ·         The cost of the loan is very high.·         Once you get a loan, where will you get the additional money to pay it off?·         You can be threatened with prosecution for “hot” or “bounced” checks, even though the lender knew at the time you wrote the check that you had insufficient funds in your account—that was the reason for the loan. This is not allowed in

Indiana.·         If you pay another fee to renew the loan for another term, you may get caught in a cycle of debt. You are never able to pay down the principal, but you are repaying the fee over and over again. The result can be that you are paying an annual percentage rate on the loan of well over 1000 percent!  The maximum APR in

Indiana is now 390% for a loan up to $250 at 15% for 14 days. Under

Indiana’s statutes, a lender may make up to five consecutive small loans to a borrower.  The initial loan plus five consecutive small loans for a total of six small loans.   If there is a balance remaining after the fifth consecutive loan which the borrower can not pay, the rate may be reduced to 36% APR and the balance repaid in installments.  An original and FIVE consecutive $100 small loans would have finance charges totaling $90.00.  Goto http://www.in.gov for more information!

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