Payday loans can seem like a quick fix when you’re short on cash, but they come with hefty interest rates and fees that can make them more trouble than they’re worth. In West Virginia, payday loans are actually prohibited by law, including in Colliers, a small town in the northern part of the state.
What are payday loans?
Payday loans are short-term loans that are typically due on your next payday. They’re usually for relatively small amounts of money, often less than $500, and are intended to help people cover unexpected expenses or make ends meet until their next paycheck.
What makes payday loans so risky is that they often come with extremely high interest rates and fees. According to the Consumer Financial Protection Bureau (CFPB), the average payday loan has an annual percentage rate (APR) of around 400%. This means that if you borrow $500 for two weeks, you could end up owing $575 in fees and interest – more than you borrowed in the first place.
Why are payday loans prohibited in West Virginia?
In 2009, West Virginia passed a law that prohibited payday loans in the state. The law cites the “excessively high cost” of payday loans and the “cycle of debt” that they can create as reasons for the ban. By preventing payday lenders from operating in the state, West Virginia hoped to protect its residents from the harmful effects of payday loans.
While the law has been successful in keeping payday lenders out of the state, some lenders have tried to work around it by offering online payday loans to West Virginia residents. However, these loans are still subject to West Virginia’s usury laws, which limit the interest rate on loans to 18% per year. This means that any lenders that try to offer payday loans to West Virginia residents are breaking the law.
What are the alternatives to payday loans in Colliers?
If you’re in Colliers and you need money quickly, payday loans might seem like your only option. However, there are other alternatives that could help you avoid the high fees and interest rates of payday loans:
- Credit cards: If you have a credit card, you might be able to use it to cover your emergency expenses. While credit cards can also come with high interest rates, they’re usually more manageable than the rates charged by payday lenders.
- Pawn shops: If you have something valuable that you can spare, you could try taking it to a pawn shop and getting a loan against it. Pawn shop loans often have lower interest rates than payday loans.
- Personal loans: If you have decent credit, you could try applying for a personal loan from a bank or credit union. Personal loans usually have lower interest rates than payday loans and can give you more time to pay back the money.
Interesting facts and statistics
While payday loans are prohibited in West Virginia, they’re still a popular form of lending in other parts of the country. Here are a few interesting facts about payday loans:
- The average payday loan borrower takes out eight loans per year.
- One in four payday loans is re-borrowed nine times or more.
- Payday lenders make $7 billion in fees each year.
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If you’re in Colliers or elsewhere in West Virginia and you need money quickly, TheGuaranteedLoans may be able to connect you with potential lenders who can offer you alternative forms of lending. Please note that we are not a direct lender; rather, we work with a network of lenders who may be able to provide you with a loan that meets your needs. To get started, simply fill out our online application today.