Welcome to The Times in Plain English   Click to listen highlighted text! Welcome to The Times in Plain English

Lenders Find New Ways to Exploit Borrowers

March 23, 2014
Plain English Version

payday-loan-applicationPayday lenders charge very high interest rates. Banks charge fees for transactions and overdrawn accounts. Banks and payday lenders both charge for late payments.

It is very hard to pay off the loans. Most lenders will “rollover” the loans by allowing borrowers take out new loans.

A borrower in Illinois was paying her loan back following the payment plan. She saw that the amount she owed was not going down. She asked about it.  She learned she was paying an “account protection fee.” This was a payment of $15 for every $50 she borrowed. The account protection fee raised her interest rate from 18 percent to 350 percent a year.

She had no choice but to pay it.

Borrowers who only pay the monthly minimum interest and protection fees are not reducing the amount they owe on the loan.

Lenders say account protection will help borrowers if they lose their jobs. The attorney general of Illinois says the reason for the protection fee is to get around laws that limit interest rates.

Illinois is trying to stop lenders from offering such loans. The state is suing the company “All Credit Lenders.”  It has storefronts in Illinois, South Carolina and Wisconsin.

An expert said payday lenders come up with new ideas all the time to get around the laws. As soon as one practice is banned, they find a new way to exploit borrowers. For example, by giving borrowers more time to repay, the loans are not considered or regulated as “payday” loans.

Short-term loans are very important to many people. Many lenders are honest, but some are not. Borrowers have to be alert.

Source: The New York Times                                                                                                                                                                     March 18, 2014

Print Friendly

In Brief

Sitting, Standing, Moving: The Road to Health 

At some jobs, you stand all day. At some other jobs, you are sitting at a desk. Whether standing or sitting, eight hours of...

Protecting the Unborn and Newborn From Asthma

The number of people with asthma is growing. About 300 million people worldwide have it. About 26 million people in America have it. Only...

Too Many Antibiotics Can Make Children Heavier

Children who use a lot of antibiotics gain more weight than others. The weight they gain may stay with them into adulthood.

A study of...

Enemy of the Day: Sugar

The U.S. government is saying how much sugar we should consume. They suggest that only 10 percent of the average person’s calories should come...


  • dictionary
  • English Dictionary

Double click on any word on the page or type a word:

Powered by DictionaryBox.com
Click to listen highlighted text!