“Payday” loans are so called because they are loans of a small amount of money made over the Internet for two weeks. The original idea was that you should repay the loan on your payday. The catch is that there may be an interest charge of $30 for every two week period. This may amount to an Annual Percentage Rate of over 500%! These lenders demand to know your bank account number for repayment by taking the money directly from your bank account. These loans are nearly impossible to pay off. The lenders like to keep you on the hook for months or years with the $30 fees every two weeks, deducted from your bank account. These payday loans are illegal for New Jersey residents, because New Jersey has a criminal usury law, N.J.S.A. 2C:21-19, setting 30 per cent as the maximum legal rate. Payday lenders may also subject consumers to constant telephone calls demanding payment. These payday lenders will not tell you their geographic location. What legitimate company hides its address?? If you take out a payday loan you will never hear the end of it. You will be bothered on the phone for years. Once you take out a payday loan, you can expect to be placed on a “sucker list” and other companies will call you with really bad offers. Some consumers have complained that their phone numbers were sold to thieves, who pretended to be the lender, but just pocketed any money sent their way.! A small number of states have legalized pay day lending. But New Jersey consumers are protected.
CLNJ’s advice re payday loans: Don’t take out payday loans at 500% interest.
If you have already done so, consult a consumer attorney.