Payday Loans - Personal Finance 101 Chat

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Follow the conversation between friends as they discuss payday loans in this episode of Personal Finance 101 Chats.

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Payday Loans

Spanish version / versión español


Chat Transcript

Jasmine: Lexi where have you been? I haven't seen you at the gym in weeks and you missed my party last weekend!

Alexis: Ugh, I have been WORKING nonstop. I had to get a second job to get out of this mess I'm in.

Jasmine: Mess? What's up?

Alexis: Well, about 3 months ago my car broke down, and between having it towed and fixed, it cost me $300. I don't have that kind of money just lying around!

Alexis: I went to the payday loan place on the corner. It's been a nightmare ever since!

Jasmine: With the car?

Alexis: Heh, no. The car's running great…it's that loan I took out. I thought I could just pick up a few extra shifts and have it covered, but it hasn't worked out that way.

Jasmine: Oh no, what happened with the loan?

Alexis: Well, it cost me $52 to borrow the $300. I had two weeks to pay the money back…

Alexis: By the time I got my paycheck and paid the rent, the light bill, my insurance, car note and bought some groceries- -there just wasn't anything left. I had to extend the loan, which cost me another $52.

Jasmine: Oh no! That seems like a lot of fees!

Alexis: It gets worse. Two weeks later, when the loan was due again, I went to a different payday loan place to get the money to pay the first place off.

Alexis: I had to give them a post-dated check that they could hold to pay off the loan until the day I got paid…oh yeah, and give them $57 just to take the loan.

Jasmine: So you still owe the second place, then?

Alexis: Not exactly. See, I didn't realize they were going to deposit that check. I thought they would hold on to the check and I would have more time like I did with the first place.

Alexis: Turns out they deposited my check to cover the money I borrowed… I had written out 5 checks to cover my bills—so they all bounced. The bounced check fees came to over $150… AND the bills were all still due!

Jasmine: This sounds like a nightmare, Lexi!

Alexis: So, after all the bounced checks, I went to A THIRD payday loan place and borrowed $500 to cover the fees for bouncing the checks, and to pay the bills that were due. The fee for that was $87.

Jasmine: OMG! Where does this awful story end???

Alexis: Heh, I don't know. I've been working about 65 hours a week to get enough money to cover the fees to extend the current loan and pay off at least a little bit of it each week. I feel like I'm never going to get this loan paid off.

Jasmine: Alexis you can't keep doing this! Have you thought about any alternatives to the payday loans or places you could turn for help?

Alexis: I just don't know what to do. I'm paying down as much as I can, but each time I have to extend the loan, there are so many more fees.

Alexis: I'm just sinking deeper and deeper. I've had to take 2 more loans to cover some of the fees. I owe money to 3 different places now!

Jasmine: Ok, here are some options you might think about. First, do you have any friends or family you could borrow money from? I wish I could loan you the money, but I just had to buy asthma medicine for my baby girl. I am pretty tight right now myself.

Alexis: I don't know. My auntie might be able to help me out. I could talk to her.

Jasmine: Another option is to talk to your credit union and see if they have any options for smaller loans that you might be able to use.

Alexis: I thought about that, but I was afraid that since I bounced checks they wouldn't loan me money.

Jasmine: You never know, and it can't hurt to go in and ask them.

Alexis: Yeah, that's a good point. I'll do that if my auntie can't help me out.

Jasmine: You might also check out some debt counseling places. A few years ago when I got in credit card trouble way over my head, they were really helpful. The counselor helped me set up a budget and figure out where my money should be going. You can find more information about reputable credit counseling at http://www.nfcc.org/

Alexis: Whew, Jaz, it's been really good to get this all off my chest. I've been so stressed about all this debt!

Jasmine: I'm sure you have been. I know it's a pretty rotten feeling. I've got to go put the baby down for her nap, but give me a call in a couple days and let me know how things are working out.

Alexis: Thanks for the advice Jasmine, I'll see what I can figure out and let you know how it goes.

Jasmine: ok, bye lady.

Alexis: bye!

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Audience:   High School, Consumers, Middle School, College
Language:   English
Subjects:   Personal Finance
Resource Types:   Multimedia
Concepts:   Types of Loans, Non-Bank Financial Services, Credit
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