Irresponsible Marketing with Payday Loans

I define “irresponsible marketing” as marketing that leads you to believe something that is just not true.

A good example is a promotional article marketing payday loans. This article was promoting that you should just use a payday loan if you need quick cash rather than borrowing from a credit card. It went through reasons such as a one-time flat fee, avoiding paying long-term interest rates, and fast loan approval.

Then of course at the bottom of the promotional article is a link to a website that will quickly qualify you for one of these payday loans.

What the promotional article doesn’t tell you is that this 14-day loan has an annual percentage rate of 782.14%. The site also promotes renewing the loan. It says you could renew a loan up to 4 times, which they do automatically unless you call them and instruct them to stop.

So let’s say a person borrowed $200 from one of these outfits, renewed it 4 times, and then paid it back in full. You would have borrowed the money for 56 days and that $200 would have turned into $440. You would pay $240 worth of interest for borrowing $200 in just 56 days. In addition, they charge fees every time you renew.

Understand that there is a difference between marketing and good prudent advice and information. Don’t believe everything that you read at face value. Learn the art of being skeptical. It can save you a great deal of headache down the road. Plus it is just good stewardship to do so.

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