What are the dangers of immediate payday loans?


Quick Answer

Seldom, if ever, is it a good idea to use payday lenders, because they ask for personal identifying information, such as a person's Social Security number, which in the wrong hands can be used to steal a person's identity, according to the Consumer Financial Protection Bureau. The sharing of such highly sensitive information such as a checking account number increases the risk to consumers.

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Full Answer

Failure to repay a payday loan can result in wages being garnished as the result of a court order. The payday loan provider may sue to get the money back if the terms of agreement have not been complied with and the borrower has not repaid the loan. Some providers may allow for borrowers to roll over, or renew, their loans — usually at a high fee, on top of the already exorbitant interest rates. Other providers, although acting unlawfully, may threaten arrest if the borrower has not repaid the loan on time.

The National Consumers League's Fraud Center cautions that many online payday loan sites are actually bogus sites intended to defraud the unwary, as reported by NBC's "Today" show. The sites may appear professional looking and may even have fake video testimonials, but they are dangerous. They may require borrowers to wire them money and the harassment for additional monies may continue without letup.

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