A New Illinois Law Caps Payday Lenders — But What Happens If They Leave The State?
When Cobi was 23 years old, he had a steady job, but it didn’t pay enough for him to save up and move out of his mom’s place on Chicago’s West Side.
He planned on supplementing his income with an additional job. To do so, he needed to buy a laptop and camera, but he didn’t have the money for those purchases.
“She didn’t do them frequently, but I remember several times where she did,” said Cobi. “So you know I said, ‘OK… if she did them … why not?’ ”
His bank then charged him overdraft fees
Looking back, he said it wasn’t difficult for him to find a payday lender because there were a lot in his neighborhood. And it was a quick process: The worker that helped him didn’t ask him a lot of questions.
Cobi went in requesting $200 dollars, and he was offered $450. He took it knowing he would have to pay it back when his next pay check came in.
When payday rolled around, he was surprised by the $600 charge in his bank account. He didn’t have the money, and his bank account went in the negative.
Payday loans are supposed to be small, short-term loans. They are available for people who need fast cash and don’t have access to another option, like a traditional bank or credit union. (more…)