Legalized Loan Sharks Lead Borrowers to Debt Trap

400% interest rates, repeat borrowing a recipe for nightmares

A survey conducted by DebtHammer finds that 90% of payday loan borrowers regret taking out their loan. That may not be surprising considering that interest rates can be in excess of 400% and it often takes five months or more to pay off a single loan.

Roughly 80% of those surveyed said that their payday loan left them in a worse position than they were in before they took out the loan. That’s because it generally takes borrowers roughly five months to pay off the loans, and by then they’ve paid an average of $520 in interest and fees on top of the original loan amount.

Short-term loans don’t help in the long run: Short-term loans don’t help in the long run: About 65% of respondents said they’ve had to skip paying another bill to pay back their loans. This is particularly troubling considering that a previous DebtHammer survey found that 58% of…