Many experts are warning homeowners that are strapped for cash to avoid easy loans. Numerous home owners are turning to these easy loans as a way to make their rising house payments, but the problem is only getting worse for many who are not prepared to deal with the interest payments on their easy loans. In some cases, interest may be as high as 200 to 400%, and when they can’t pay them back, some homeowners are taking out a new easy loan to pay for the first, which further perpetuates the problem and makes it harder to get out of debt.
“Potentially 50 percent of those borrowers end up in default on those payday loans,” warned Leslie Parrish of the Center for Responsible Lending. Oftentimes people can’t pay that loan back and make their mortgage payment or rent payment or have enough leftover for food or transportation expenses, so then they have to take out another payday loan two weeks later, and that cycle tends to continue.”
“It’s like handing a suicidal person a noose. Of course, they’re going to reach for it. It solves your problem today, but it doesn’t solve the problem down the road,” said Cornell University’s Robert Frank.
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