DES MOINES, IOWA -- In a press release Tuesday, Iowa Attorney General Tom Miller warned the public about payday loans. Miller’s statement says that consumers should be wary of them, especially online payday loans.
The Attorney General’s press release contained the following information…
Here’s how payday loans work: For $100 in cash now, you write the lender a check for $116.67, which is cashed in a week or two. A $16.67 fee for a two-week, $100 loan works out to an APR interest rate of over 434%. In comparison, even a very expensive credit card would only charge around 24% APR – that ends up being a 92 cent fee for that same $100.
“Obviously in a situation where you are trying to make ends meet and you are looking for any option to keep the cash flow going at home, one of those options is a payday loan. And we are tying to let people know, be very careful before you consider a payday loan. They are very expensive, they have fees up-front and they are at an astronomically high interest rate. So be very careful before entering into any kind of agreement with a payday loan lender,” said Geoff Greenwood, Communications Director with the Iowa Attorney General’s Office.
Another area that the Attorney General is concerned about is online payday loans. These loans are actually illegal in Iowa if the lender is not licensed by the state and does not have a physical presence in the state. The Attorney General recommends for consumers not to use online payday loans, so that consumers are not getting scammed online.
The Attorney General’s Office asks that if you feel that you are being taken advantage of or you would like to file a complaint, contact the Attorney General’s Consumer Protection Division in Des Moines at 515-281-5926 or 888-777-4590.
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