The Long-term Effects of Your Short-term Loan

When the financial status in the United States started to turn for the worse, three million sensible Americans went out to get a payday loan, and now because of that they cannot avail mortgage loans.

The status of the economy has gotten harder for the citizens that they would look for any way to get their hands on a loan when they need it. Mortgage loans are the most sought for by the masses, however the lenders are starting to become tight fisted when it comes to loaning to people who had availed payday loans, even if they had settled the accounts.

If you are planning to buy land or own any establishment, it just means you have to think it through before you get a loan. Though short-term loans or payday loans as many would call them are commonly availed by many, banks still refuse to approve loans from those who engage in the business.

Payday loan stores have been supplying their data to banks since the start of the year. The financial institutions will then refuse to give mortgages to the people whose names appear in the list. Employees are just expected to reject a customer even if he or she has good credentials.

According to Marc Gander, the founder of the Consumer Action Group; consumers are being kept in the dark by the institutions because they are not informed that getting a payday loan would ruin their hopes in purchasing a house.

Meanwhile, according to Keith Osborne, it is important to think really well if you need a mortgage loan in the future before you decide on taking on a payday loan for this will make you most unlikely to get one.

The spokesman of Consumer Finance Association, Mr. Richard Griffiths says that it is a unwise decision to base a costumer’s ability to handle a mortgage loan through his decision to apply for a payday loan.

Payday Loan Trap

The number of payday loan stores in Missouri is extremely high and it raises concern from some citizens. The increase in the business had been parallel to the increase of the poor and middle class citizens in the area. Sadly, these people are starting to approach their credit card limits and they have no available funds for crisis.

The payday loan stores in Missouri would provide their customers $100 to $1,000 worth of loans in a week or up to a month. These loans do not require anything more than an applicant’s proof of employment and a postdated check from the applicant.

According to the Federal Reserve Bank of New York, 76 percent of the business’s transactions often come from the same customers. This means that the people who avail of these loans are in an inescapable circular cycle of debt. The interest rates in the area is maximized at 1,980 percent however people will still find it difficult to pay off the loans no matter how much they try to.

The industry would victimize and take advantage of the destitute families in Missouri. The local authorities have been trying to control the situation for so long. However, with the problem getting so much out of hand it seems that it is about time that new legislative laws dealing with payday loans must be drafted and imposed in the area.

However, no businesses would be interested to invest in Missouri if the cap goes any lower than 1,980 percent. According to analysis, a reduction of 36 percent in the cap would allow businesses to run without further damaging the financial status of the citizens.

On the other hand, those who oppose the interest cap claim that it would destroy the industry. Most of the support is given to the decrease of the cap. Everything would just depend on the final ballots that would be casted on November.

Lender Will Reject Mortgage Applications from Borrowers with Payday Loans

Applying for a payday loan can actually hinder the possibility of getting approved for a mortgage loan. In fact, GE Money Home Lending made a decision not to approved applications from borrowers with a background on recent payday loans. On the other hand, other lenders are still vigilant towards borrowers.

Although payday loans provide credit for a span of two to three weeks, it charges high annual interest rates. For example, a £100 loan might be charged with interest rate of between £20 and £30.

GE Money Home Lending will no longer approve applications of borrowers who have a payday loan in the last three months or who have had two or more payday loans in the previous year, even those who paid off their payday loans in full and on time.

This is because a lot of lenders perceive payday loans as an indication of financial difficulties. According to the spokesperson of GE Money, they assess a variety of data in order to make cautious decisions concerning mortgage lending, and that borrowers who have a current or previous payday loan will no longer be considered candidates for loans.

David Hollingworth from London & Country, a mortgage broker in Bath, Somerset, said that since having payday loans can mean the borrower is struggling from a financial problem, they are most likely seen as higher risks by the lenders.

Moreover, Brian Cole, chief executive officer of Capital One, said that having a payday loan, even if it’s already paid off on time, causes a negative impression on your credit report.

However, according to John Lamidy, chief executive officer of Consumer Finance Association, which is the organization for payday lenders, having a payday loan is not an indication that you are facing a financial trouble. Instead, it simply means the borrower needed a certain amount of money for a short period of time.

Payday Loan Campaign Failed to Abide to Rules

Last week, the political practices commissioner in Montana has said that he believe there were numerous problems in the reporting of financials behind a campaign that started out last 2010, which constrained payday loans.

Many of the voters agreed to the interest cap rate to be only 36% for the loans. This eventually led to the termination of several payday loan businesses and agencies. However, there was one owner that filed a lawsuit against the groups. He said that these groups never revealed their work on their campaign.

Jim Murry, a Commissioner in the state of Montana believes that there was reason to believe that the groups that started the campaign in 2010 may have broken some disclosure laws.

One of the groups, Cap the Rate was unable to reveal one of its labor union’s $5,000 contributions. They even filed disclosure reports late, twice.

The Commissioner further stated that there were several other groups who filed late because they have failed to thoroughly discuss their involvement in the labor unions.

Montana’s AARP failed to put“paid for” information in their website and it is among those complainants that have failed to disclose their involvement on time. The same mistakes were found to be made by the Montana Human Rights Network, Rural Dynamics, NeighborWorks Montana, Montana Women Vote and the Montana Community Foundation and Montana Women’s Foundation.

According to the commissioner the state would only impose penalties in these cases because there is enough evidence to prove that the groups have indeed breached disclosure reports.

The Human Rights Network believes that the findings of the office of the commissioner would be a good example to similar groups that would want to file the same complaints in social media sites like Facebook in the future. However, Travis McAdam firmly states that his group was able to report its financial spending during their 2010 advocate.

Payday Loan Debtors are the New Target of Scams

Caution is what the Connecticut Department of Banking requires from their clients today. There is a new group that are targeting debtors and threatening them of being imprisoned unless they pay their payday loans.

According to the bank’s commissioner, Howard Pitkin, these scammers get their information from the clients online. They would call the debtors at home or on their work, or when matters come worse, they even call their relatives or friends to as for the “payment” of their loan. These people threaten the clients of sending officers to arrest them for not paying their contracts, and they could be very intimidating.

The office of Mr. Pitkin has been receiving complaints from customers about these scammers for about six months now, and the number of complaints can now reach about 40 in a month.

The collectors would claim that they had bought off the loan of the payday client from the agency, but this is of course never proven in any of the documents. Some of the clients who have paid their debts full continue to be harassed by these hooligans.

These scams have been affecting the lives of many innocent people, for instance, there was one problem when a person almost lost his job because the scammers kept calling their office and harassing the company employees. Another time, a lady was so restless with the threatening call she received she decided to come and turn herself in to the authorities.

If you are currently experiencing these problems of receiving anonymous threats and calls, and the collector will not seem to leaving you alone, or if you have been a victim of these people then call the Bank of Department’s Consumer Affairs Division. Their numbers are 860-240-8170 or you can call toll-free at 800-731-8225.

If you are having difficulties in buying food or other necessities, you can get in touch with charitable institutional programs by dialing 211 in the information line of the United Way.