DOTHAN, Ala. (WTVY) – The COVID-19 pandemic, job loss and inflation have forced many people to turn to payday loans and loans when in a rush to make ends meet. But, sometimes it comes with scams and predatory lending.
The Better Business Bureau recently conducted a study on this, and found that more and more people are turning to these options to get by, and they are warning consumers about scammers.
“What’s happened over the past two years has only added fuel to this fire,” said Alex Derencz, BBB Serving Central & South Alabama communications manager. “Again, a lot of people found themselves in difficult situations.”
Derencz said each of these factors puts people in a financial bind financially looking to get a payday loan for a short-term fix.
“One of the findings was that many people take these payday loans and fall into their ‘debt trap,'” Derencz said.
Payday loans aren’t new, and Derencz said they’re not always a quick fix. He said it was crucial that people understood the loan numbers to avoid ending up in worse financial shape than when they started.
“Let’s say you needed to pull out $300 to cover your rent, well, two weeks later, you’re still not able to pay, more money is going to be in tact, more interest is going to be in trouble. tact, and you know at the end of that month $300 is going to be way over $400,” Derencz said. “So you can fall into a deeper hole than when you started.”
Another thing to watch out for: scams. The payday loan market offers legitimate options, but there are also scammers.
“Scammers, one of the things they take advantage of is that they thrive when needed,” Derencz said. “Whether there is a certain product that people need or people just need them in general. One of the things that this study found is that they prey on the insecurity of individuals, and often times people go to Google and search for these types of loans, and come up against bogus websites or just to bogus organizations.
Derencz suggests, when you’re in a hurry, researching nonprofits, asking friends and family for help or advice, or contacting a credit union. Overall, he said it’s important to do your due diligence and see what routes are available to get down.
“It can be scary, you know, saying you’re short on rent, saying you’re short on your utility bill for the month,” Derencz said. “I mean it’s a very scary thing, and the natural reaction is to go ahead and hit that panic button. But you have to take a deep breath and look at all the options available to you. you.
He also advises to be wary of unknown callers and emails. He said to take a look at what comes after the “@” symbols; legitimate payday loan companies will not send information from a Gmail or Yahoo account. Derencz suggests going to a trusted place to get a payday loan if you decide to do so.
Another important tip he shared: read all terms and conditions before signing on the dotted line.
Click here to see the full study.
Subscribe to our Newsletter News 4 and get the latest local news and weather straight to your email every morning. Get instant notifications on top News 4 stories by downloading our mobile app.
Copyright 2022 WTVY. All rights reserved.