Payday Loans: Always a Bad Move

We’ve all heard or seen the ads and commercials for so-called payday loans. They offer to put a few hundred dollars directly into your bank account – just enough to get you over the financial hump until your next payday. With Christmas approaching and Black Friday around the corner, the temptation to use this dangerous financial “service” can be strong.

These loans are always deadly to your financial health! Don’t get caught in the payday loan trap. Here are the common dangers:

·      The interest rates are as bad as the worst credit cards, and the lenders will try to make you pay even more through “fees”.  The average APR (annual percentage rate) can be as high as 300% !

·      Once you are in the hands of a payday lender, it is very hard to get away. People remain indebted not just until their next payday, but often as long as 200 days, according to a government report. Even worse, these loans often result in a cycle of repeated debt that can affect you for a very long time.

·      By taking a payday loan, you’ve given an unscrupulous lender access to your bank account, and you may find that unauthorized or incorrect charges that you never knowingly agreed to have been sucked out of your account.

·      Payday lenders are notoriously difficult to contact if a problem arises.

·      While you may not be able to contact the lender, most payday lenders are extremely aggressive about contacting and harassing you if you experience a problem that delays your payments on the loan.

·      There have been many reported cases of payments you make not being credited to your loan, or even not receiving the money in the first place after you apply for the loan.

The Federal Consumer Financial Protection Bureau has been investigating payday loans, and recently filed its first complaint against one of them. You can get more information, or raise a complaint yourself, by contacting the Consumer Financial Protection Bureau toll-free at 855-411-2372. You can also file a complaint online at www.consumerfinance.gov/complaint

Investing in Foreclosed Properties

Buying homes in foreclosure continues to be a potentially lucrative investment. You have to be willing to do a lot of work in terms of finding the right opportunity - and maybe a lot of work in terms of physical repairs - but there is still money to be made.

According to nationwide data from RealtyTrac.com, foreclosed properties sell at an average discount to value of approximately 40%. For example, you might find a property fairly valued at $600,000 that you could obtain for less than half price. Moreover, the differential between value and price has been growing, making such opportunities more attractive.

For the knowledgeable investor - with equally knowledgeable legal counsel, of course - the opportunity to buy a distressed property, add value to it and return it to the available housing stock, while making a reasonable profit, is still there. Moreover, according to the data, the potential profit on such investments appears to be growing - at least in theory.