Multiple payment payday loans

Payday advance check storefrontPayday loans can wreak havoc on a person's financial life. These loans carry sky-high APRs and the penalties for late or missed payments can be extreme. Many consumers, who turned to payday lenders in a time of need, later find themselves worse off than when they started. In this series, WalletPop takes a look at the payday lending industry and some of its players: those who dole out the loans, the regulators who try to rein them in and the people who desperately take out these loans hoping for a fresh start. This is the first installment of our payday lending series.
When you're broke, as in really broke, the reasons for taking out a payday loan seem logical. But payday loans can be a gateway to a serious problem; a vicious cycle that can seem impossible to escape. I should know. Two years ago, when the recession started to rear its ugly head, I took out my first payday loan.

I'd like to say that I turned to these loans - which typically offer rates of as high as 390% APR and sometimes double that - just once or twice, but throughout the recession, as magazines I worked for folded, they became the one place I could turn to if we really needed money in my bank account. And there were times when I really did need to inject some income into our checking account - or run out of grocery money or have our utilities turned off.

In my case, I never had a problem paying any of my loans back, and frankly, I'm not sure what I would have done during the worst months of the recession if payday lending didn't exist. But I've been lucky, so far. Taking out a payday loan can be a little like playing with dynamite.

"Once you get in that cycle, it's hard to get out, " says Curtis Arnold, a personal finance expert, author and CEO of, a credit card comparison site. "It feeds on itself where you become more and more dependent and you end up owing more of your soul, if you will, to these lenders."

If the Center for Responsible Lending is correct, the average customer who takes out a $350 loan can find themselves stuck in a debt cycle where they wind up paying $822.50. How that happens to be, I assume, is that if you're on a fixed income, living paycheck to paycheck, your expenses are fixed, and you likely don't have a lot of wriggle room to be taking out loans. So taking out a $350 loan and then trying to successfully repay it within two weeks can be quite a hat trick.

How a $200 Loan Turned Into $1, 800 in Payments

For the purposes of this article, I tried to find people who took out payday loans and rued that decision, but it's not something a lot of people are proud to admit in print. Still, I did find one woman brave enough to share her story.

Joylynn M. Jossel is a poet and author in Columbus, Ohio, who took out a payday loan several years ago. It was only a couple hundred dollars at first, but she had trouble making the payment two weeks later. She doesn't recall exactly what the interest being charged was, but I can tell you that in Ohio, for every $100 you borrow, you fork over $15 to a payday lender, and that comes to around 390% APR. The APR is meaningless, though, if you pay off the debt in time. If you don't, then, sure, the APR becomes very significant.

And in Jossel's case, she couldn't pay off her first loan. Desperate, she turned to a second payday lender in order to pay back the first payday lending store. "Before I knew it, " says Jossel, "I found myself owing three to four different lenders."

Every month, Jossel would pay off her loans to the lenders - and then, because she needed money to pay her bills - she would take out another loan right away. She eventually found herself spending up to $1, 800 per month toward payday loans. And when that became too overwhelming, Jossel wound up asking friends to take out a payday loan on her behalf.

Interesting facts

  • As banks and building societies close their doors to all but the least 'risky' borrowers, Dispatches reporter Jane Moore investigates a highly lucrative financial industry that has stepped in to provide loans to the millions of people denied credit elsewhere.
    She discovers that many of the loans offered by some of these doorstep operators...

Additional information

Payday Loan Debt Consolidation Program
Payday Loan Debt Consolidation Program
Using The Payday Loan Organizer, Software Spreadsheet Part One
Using The Payday Loan Organizer, Software Spreadsheet Part One

Popular Q&A

what happens if you miss payments on a payday loan? ? | Yahoo Answers

Honest answer is your life is plunged into a hellish vicious circle where you rarely get out of.
Good luck but talk to them and get any arrangement in WRITING! DO NOT skip this step. You will end up paying about 5-10 times the original amount.