Elrama, Pennsylvania, is a community in which payday loans are prohibited. Pennsylvania is among the 15 states in the US that have banned payday lending. This measure was taken to protect borrowers from short-term, high-interest loans that often led to trapping consumers in a cycle of debt.
What are payday loans?
Payday loans are short-term, high-interest loans that are marketed as a quick fix to cover unexpected expenses until the next payday. These loans are usually for small amounts, with a high cost for borrowing. For example, you could borrow $500 for two weeks, but you would have to repay $575. The interest rate on payday loans in Pennsylvania can be as high as 400%.
Why are payday loans banned in Pennsylvania?
The state of Pennsylvania has taken a strong stance against payday lending because of the high interest rates and fees that these lenders charge. Payday loans were causing borrowers to become trapped in a cycle of debt, where they were unable to pay off their loans and had to take out new loans to cover the old ones. This cycle led to borrowers paying more in fees and interest than they ever borrowed, and many continued to struggle with debt long after taking out their first payday loan.
What are the alternatives to payday loans?
Fortunately, there are many alternatives to payday loans that are available in Elrama and throughout Pennsylvania. These alternatives include:
- Traditional bank loans – Many banks offer personal loans with lower interest rates than payday loans. However, the application process for a traditional bank loan is usually longer and more strict.
- Credit counseling – Credit counselors can provide consumers with a debt management plan that can help them get out of debt without using high-cost loans.
- Web-based lenders – There are numerous lenders who provide online loans at a lower interest rate than payday loans. However, you must have a good credit score to qualify for these loans.
- Side job or increasing income – Consider a temporary job on the side or work overtime to receive more hours. A slight change could make a big difference in helping you achieve financial independence and prevent the need for borrowing money.
- Credit cards – Despite having high interest rates, credit cards have a lower interest rate than payday loans. Credit cards can also help build credit score, which can provide access to better financial options in the future.
Interesting facts and statistics about payday loans in Elrama, Pennsylvania
In 2016, payday loans in Pennsylvania were effectively banned, which made Pennsylvania one of the 15 states (plus the District of Columbia) that banned payday loans. Before this ban, Pennsylvania residents paid a median annual interest rate of 591% on payday loans. Research has shown that payday loans are frequently used by borrowers who are experiencing financial distress, usually in situations where they’re in desperate need of money to avoid eviction, buy food or medicine, or pay utility bills. The majority of the payday loan users also have low to moderate income and face challenges accessing affordable credit and banking services.
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If you are in need of financial assistance and live in Elrama, Pennsylvania, TheGuaranteedLoans can help connect you with potential lenders who may be able to help you. As a connector service, we’re here to help you find lenders who can finance your needs. Please note that we are not a direct lender, but we can help connect you with all the suitable lenders from our network who are willing and able to work with you.
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