changing tax laws - are you up-to-date?

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changing tax laws - are you up-to-date?

Taxes are a complicated subject and making the slightest mistake could end up costing you quite a bit in penalties. Do you spend time each year keeping up with the changing tax laws? These laws change more often than you might think. Before you consider filing your taxes on your own, stop and think about what it will cost you to have them professionally prepared versus paying the penalties for making mistakes. My site includes information about the ever-changing tax laws as I know them to be now. The information here is only meant to guide you to making the best possible decisions for your personal situation.

5 Surprising Facts About Payday Loans

Many people have found payday loans to be a quick and convenient way of getting extra money for wide variety of expected and unexpected expenses. However, there are a lot of things about payday loans that many people would be surprised to find out. The following sheds some light on five surprising facts about the payday loan industry.

#1: They Haven't Been Around for Long

In comparison to other consumer finance tools, payday loans are a relatively recent development. It took a series of developments in federal and state banking law throughout the 1970s and 1980s to make payday loans viable. It wouldn't be until the 1990s that payday lending found its groove, eventually growing into an industry currently worth over $40 billion.

#2: Payday Loans Are No Different from Other Types of Loans

The methods of acquiring a payday loan might be different from other types of loans, but they're treated just the same as any other type of loan. As required by the federal Truth in Lending Act, payday lenders must follow many of the same stipulations required of most traditional lenders. This includes providing upfront information about the annual percentage rate of the loan, as well as the finance charges included with the loan prior to signing. These regulations ensure that consumers remain well-informed about how they receive their extra cash.

#3: Credit Checks Aren't Needed with Payday Loans

This surprising fact is a major advantage when it comes to getting cash quickly. Instead of pulling standard credit reports on their customers, many payday lenders use risk assessment databases that track consumer credit history for non-traditional lenders, including payday loan companies and rent-to-own stores. Many payday lenders don't use these databases at all and some will even advertise this fact to draw more customers.

In contrast, traditional lenders tend to use credit scores and other information gleaned from credit checks as a gatekeeper of sorts. It's why customers with less-than-desirable credit often find themselves shut out of many traditional financing options. The lack of a traditional credit check is what makes payday loans so appealing to a wide variety of people.

#4: The Average Payday Loan Customer Isn't Low-Income

Contrary to popular belief, payday loans aren't the sole province of low-income individuals. Payday loans appeal to a broad spectrum of borrowers, including those with moderate to high incomes. As Time Magazine's Martha C. White notes, payday loan usage among Americans making less than $15,000 a year actually fell while households with incomes ranging from $50,000 to $75,000 boosted their payday loan borrowing by a percentage point.

Many middle-income Americans find payday loans attractive thanks to the relative ease of getting one as opposed to other traditional types of credit.

#5: Military Borrowers Benefit from Unique Payday Loan Protections

Since military servicemembers are at greater risk of falling prey to predatory lending tactics, the federal government enacted several unique stipulations aimed at protecting military borrowers. According to the Military Lending Act:

  • Servicemembers can't be charged more than 36 percent APR, including interest, fees and other various service charges.
  • Lenders are prohibited from rolling over or refinancing the same loan unless the terms are favorable to the borrower.
  • Lenders must offer full disclosure on interest rates and other various fees in writing and orally prior to signing.
  • Lenders can't charge a prepayment penalty to those who pay back part or all of a loan early.
  • Servicemembers aren't required to allow lenders to deduct payment from their paycheck or bank account in service of the loan.

Lenders are not allowed to waive a military borrower's right to use consumer protection laws such as the Servicemembers Civil Relief Act. In addition, they're also prohibited from forcing military borrowers into arbitration instead of resolving debt disputes in court.

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