There are plenty of places available that are designed to help consumers obtain money when they need it. From bad credit loans to 3 month payday loans online and even traditional bank financing the choices available to you are quite far reaching. But what happens when you are under the impression that you are applying for one type of loan only to find out after the fact that you are actually given a different type? For example, many states have started banning payday loans due to the predatory lending policies and practices that surround the industry. The lawmakers feel that it is best to restrict payday lenders; however, the lenders are not happy about this.
As a way around the fact that they are unhappy, they are often teaming up with many banks now to work around the ban. This means that many consumers are being caught in the middle and are often finding themselves borrowing from someone other than who they have actually applied with. The way that this practice works is a consumer would go to their normal bank and apply for a loan. For the sake of argument, we shall name the consumer in this example Michael T. Blackburn. Michael goes to his local bank to get a loan for $500 to help him pay for a car repair that he badly needs.
In the process of applying for the loan the bank discovers that Michael has terrible credit, however since they do not want to simply turn Michael away they work out another arrangement for Michael. The most common way would be for the bank to consult with a partner whom they have an arrangement with. The partner would typically only come into play if there is a consumer who has bad credit. In this circumstance, the partner would then make the loan to the consumer, in this example Michael and then while Michael is under the impression that he owes the money to ABC Bank he would actually owe the money to GshLoans Payday Lender.
This practice is bad for consumers because they are still paying the high interest fees and actually many are under the impression that they are getting a better deal this way. However, in Michael’s case it is not a good deal at all, because the bank is charging the extremely high interest rates that GshLoans Payday Lender charges. However, to the consumer the loan is taken from the bank itself. This can leave a consumer dazed and confused and because the interest rate may not be blatantly disclosed, it can leave a consumer paying out a lot more money than they are anticipating for the loan.
While this is a practice that is skirting the laws, it is occurring more frequently than in the past. The bans that states have placed on payday advances has increased the occurrences of this happening it is something that starting to catch the attention of the media and therefore the public eye as well. For consumers who are caught in the middle it can be a very upsetting time. However, for consumers who are trying to get a firm grasp on their finances it can create problems since the interest rates are so high. This means that it is very important you know exactly what the interest rates are that you should expect to pay and always question anything that seems out of place, even from a bank because you never know if you are getting caught in the middle.