Call it a cash advance, a post-dated check loan, a deferred deposit loan or – its most-common moniker – a payday loan, it’s all the same thing: You’re borrowing money from your future paychecks or other sources of income to try to cover today’s expenses.
No matter what you call it, however, it’s really a bad deal.
Texas has very little regulation over payday lenders
Many states have started to eliminate or restrict payday lending because they’re inherently predatory. The people who use them are generally desperate for quick cash – and the lenders are happy to oblige with sky-high fees and interest rates.
While some local communities have placed restrictions on payday lenders, the state of Texas has not. In fact, there’s actually no maximum limit on a loan amount – and no limit on the interest rates either thanks to what is sometimes called the “credit access business” loophole.
What happens is that many borrowers find themselves in an endless cycle of “robbing Peter to pay Paul.” They’re already in dire financial straits, and the exorbitant interest rates make these micro-loans very costly. When the bill for the payday loan comes due, they end up having to borrow to meet their regular expenses all over again. It’s not unheard of for people to “float” more than one loan between several different payday lenders at once, just to try to keep going.
True debt relief is available
If you’re already in a situation where your credit won’t allow you to get a regular bank loan and your finances are stretched too thin for any kind of emergency savings, it may be time to consider real debt relief – like bankruptcy. You can get the fresh start you need and build back from there.
