A new report found that many payday lenders in Nevada did not receive a satisfactory rating.
Consumers who are considering getting payday loans in Nevada might want to read the fine print carefully. Almost one-third of payday lenders, check cashing, and title loan services didn’t receive a satisfactory rating in a recent Nevada state audit of financial entities.
Currently in Nevada, there are over 500 licensed lenders who do short-term, high-interest loans, according to Public News Service. The problem with these types of loans, particularly when they aren’t fully regulated, is that the people who use them have a hard time staying afloat financially because of the high interest rates charged.
Although a 2017 study by LendEDU found that many payday loan borrowers had a positive view of the product, the high-cost loans come with undeniably big risks. In an attempt to avoid default on one of these loans, a customer might seek to roll it into another similar loan that’s bigger. The pressure to avoid late fees and a ding on their credit score can cause them to rely on these additional loans. The borrowing can keep stacking up until the borrower finds themselves unable to escape from their debt.
Why Are Short-Term Loans a Problem in Nevada?
Nevada doesn’t cap the interest on short-term, high-interest loans. An attorney who represents payday loan borrowers told Public News Service that she has seen some debts with interest rates in the four-digit range. She noted that consumers should remember they have a legal right to obtain a repayment plan rather than take out a new loan.
In 14 other states, databases are maintained and used to ensure compliance of lenders and to stop lenders from issuing loans to borrowers who likely won’t be able to afford to pay a loan off. For instance, a lender could look at the database and see a person already has multiple payday loans and could decide not to issue one. The Nevada audit noted that the state’s borrowers would benefit greatly from such a system.
Are There Better Alternatives to Payday Loans?
Many people feel forced to take out payday loans when they are in a financial bind because they don’t realize there are other options out there. But here are a few things would-be borrowers can look into before pursuing payday loans.
One of the first things a borrower can do is get a payment plan set up with the companies they owe – rather than roll the first loan into a new, bigger loan. They shouldn’t wait until they are far behind on their payments or the companies might be less willing to work with them. What they should do is call their lenders as soon as they realize they might not be able to pay as expected.
Instead of skipping the payment entirely, borrowers should offer to meet part of the payment if they can afford to do so. That will show the companies they are serious about meeting their obligations.
Borrowers can check into getting personal installment loans instead. They are available from banks and credit unions, and they often have longer repayment terms and lower interest rates than payday loans do.
Another route a person can go when they are experiencing financial trouble is to ask their employer if they can have an advance on their paycheck. Not all companies offer this option – in fact, many do not. But the companies who do are still out there. Usually, the ones who do offer advances on paychecks are larger companies.
Author: Mike Brown
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