Greg's Corner

A new type of predatory lender mails loan checks to you

With more and more Americans living paycheck to paycheck, any unexpected expense could put you behind for months or years. That could then result in having utilities turned off, or even worse, you could be evicted from your home. There are many predatory lenders out there who are looking to take advantage of your situation. One of those types of lenders is payday advance loans. They would lend you money until you would receive your paycheck but when you pay them back you’re behind again and the payday lenders would encourage you to take out another loan until you were dependent on them to try to make ends meet. A number of states heavily regulated or outright banned payday lending in order to help consumers, but now a new predatory practice has emerged to supposedly take advantage of those of lower economic status.

According to the Washington Post, at least one lending company is mailing checks to people unsolicited for over $1,000 apiece. The checks are legitimate and can be cashed, however, if you were to cash one, you’d be entering into a loan with the lender. The loans not only have to be paid back with exorbitant interest rates, but the lender will try to get you to borrow more money in the meantime. This lender seems to depend on the fact that most of its customers won’t be able to pay the loan back and end up taking their customers to court where according to the terms of the loan, the customer has to pay the lender’s legal fees as well.

While it may be tempting to cash one of these checks while you’re in financial straits, they can only make your situation worse. You may think that you’ll be able to dig your way out of such a financial hole but these lenders stack the deck against the consumer so much that it’s almost impossible to pay them back without finding yourself into legal trouble. Having been in financial desperation myself in the past I wish I could tell you there was a magic answer to solve your money problems. The only thing I can do is to try to help you keep an eye out for those looking to take advantage of your situation so you don’t find yourself in even bigger financial distress.