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Money Talks | Predatory loans are very dangerous

Using a payday loan might just feel like a deal with the Devil. After signing and getting your cash, you might be saying, "what have I done?"

TEMPLE, Texas — We've all been there at some point in our lives. You get into a financial pinch for any number of reasons and you just need some quick cash. 

However, getting one of those no-credit-check-easy-to-obtain-loans could make you a customer longer than you think. 

With interest rates anywhere from 200%, to 300%, to as high as 400%, and special "teaser" rates offered, these quick cash loans can be easy to obtain, but really hard to pay back. 

"If you ask me, my kind of personal opinion there is that they are placed in certain areas, for people that may need income on a more frequent basis or may need money quickly that’s easy to obtain, " said Rolandus Johnson (Rojo), a financial planner, told 6 News, "And so what you end up getting is people that get in and need that extra income and then they get into trouble because now they've got it, and they did whatever they needed to do and now they can't pay it back." 

It is by design to keep you as a client in perpetuity. 

“Rojo” went on to say: "It almost kills your financial future. Because the interest rate is so high. And then the extra money that you would have had is going to that so you can't invest and there's a lot of things that you can't do. So I would say, and this is with definite, right here, stay away if you possibly can. I know that things happen but stay away from those type of loans."

Sadly, some Americans can’t stay away. Even with that advice according to pewtrusts.org twelve million Americans take out payday loans each year, spending $9 billion on loan fees. 

Many of these types of lenders are predatory, as Rolondus explained to us: "Uneducated on the way that loans work. The way credit works and these different things. And may have had some mistakes in the past. And so they will go there and they will get the money that they need not knowing or even reading the fine print saying you know if you take out 500 dollars you're going to pay me back 2,500."

And here's a little perspective for you.  

As of 2017, there were 14,348 payday loan storefronts in the United States, at the same time there were only 14,000 McDonald’s locations. The typical payday borrower is in debt five months out of the year. And the average income of payday loan borrowers is $30,000 annually.