BBB issues payday loan warnings

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MONTGOMERY, AL (WSFA) – Many people can be strapped for cash after overdoing it for the holidays. The simple fact is that some people cannot qualify for a traditional loan, either because they are not earning enough or because they have poor credit.

For some people, payday loans are the only option, but before you sign on the dotted line, there are some things the Better Business Bureau would like you to know.

“It can be so damaging in the long run, to start this downward debt vortex that is hard to get out of,” said David Smitherman of the Better Business Bureau.

The BBB has several tips you should think about before signing on the dotted line. Consumer experts say it’s very important to read all the fine print and know exactly what the interest rates are.

“You have to repay this loan on schedule or they will be happy to renew it for you. It can go on for weeks or months and you end up paying two to three times what you borrowed. “

There are laws that determine how what you can borrow and the maximum interest rates you may be charged. In recent years, the Alabama legislature has introduced several bills to regulate the payday lending industry and reduce maximum interest rates.

The big thing to remember, know what you’re agreeing to and what will happen if you can’t make the payments.

Copyright 2019 WSFA 12 News. All rights reserved.

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