Protect yourself from Personal Payday! An emergency can make you fall into networks not only of fraudsters, but in loans that can be very expensive.
The little culture of savings in our country means that there is no emergency fund, as the name implies: it helps to get out of the way in the face of an inconvenience. Most of the time, this can be an accident or illness.
Lending money to someone who has no verifiable background
Many people can lose their assets looking to solve these emergencies. Since, due to the pressure they feel to get money, they arrive with usurious lenders who end up taking away their assets because users could no longer pay high interest.
Personal Payday loans are understood as those whose interest rates are well above the average offered by regulated financial institutions. One of the ways in which usurious lenders can be identified is to see how they are offering their credits. If they do it under promises similar to “we don’t check the credit bureau,” be careful. Since they will charge high interest for the risk they are running when lending money to someone who has no verifiable background.
What can happen?
First of all, given the urgency of the situation, it is normal, although unfortunate, not to think about the comparison. Nor do you think if you can pay or simply if you will get the money to face this commitment.
All the steps prior to hiring a loan are forgotten, such as checking your ability to pay or borrow, if you have other debts, and for how long you will have to commit your income to pay it, which ultimately results in an over-indebtedness with high interests.
That is the story of a large number of Mexicans: living forever indebted due to loans with interest above the market. Since there are those who take advantage of it by charging too high interests and aimed precisely at people with great stress due to an unforeseen situation.
Another very common situation is to go to pawn shops to leave a good as collateral. According to date from the National Association of Pawn Shops, each year, 35 million Mexicans access pre-loan loans whose interest rates can reach 372 percent. This is due, in part, to the fact that the people who come to ask for the credit get it in a matter of minutes, but at a very high price.
Make a comparison and do not go with the first one you find
The National Commission for the Protection and Defense of Users of Financial Services (Condusef) recommends that when using workshops and other sources of financing you make a comparison and do not go with the first one you find so that you are not a victim of a usurious loan
It is very important to compare. According to Condusef, while the average Total Cost of Private Pawn Shops is approximately 250 percent, in the case of Private Assistance Institutions it is 120 percent. Thus, in case of hiring without comparing you would be paying more than double what they lent you.
It is very likely that in the event of a possible emergency, you may forget this. However, think for a moment that after solving it you will be left with a huge problem and you will pay too much for not taking a little more time. Get in the habit of comparing all the financial products and services that you are going to use so that you do not run the risk of being a victim of Personal Payday.