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In
San Jose, pawn shops are still a great source of short-term, collateral
based loans, but due to lack of regulations within the state of
California, the payday industry should be avoided.
Like all other
pawn shops, the great San Jose California pawn shops have become a
source of payday loans (advances on your paycheck that are repaid with
high interest rates and large flat fees).
The payday loan business has boomed in recent
years, and pawn shops want their share of the industry.
The problem is, many feel that payday loans
are no different than a standard loan shark business.
One issue many
people have with the payday loans industry is that loans are not used
on a one-time emergency basis. Extensions
are offered at San Jose California pawn shops for those who cannot
repay the payday loan in the set time period, meaning that each
extension incurs a new late fee. Often
this means the borrower ends up paying double what was loaned.
Another problem
is the high interest rates charged for payday loans at San Jose
California pawn shops. California
banks charge a considerably lower interest rate and do not have the
high default rate on loans and credit cards (less than 3% in 1996-97)
that are stated by the pawn shops and payday lenders.
Therefore, the risk taken by the pawn shops is
not as high as they may claim, meaning there is no reason for the
exorbitant interest rates charged.
Also, in the
state of California, payday loans are not regulated as tightly as they
are in many states. San
Jose California pawn shops are not monitored, audited, or limited in
the charges and interest rates they can apply to their payday loans. It is much safer to
utilize a regulated finance lender if you live in San Jose.
Also beware of
any agreement that requires a post-dated check to be left behind for
payday loans. This
can turn into a nightmare, as it is entirely possible that the payday
lender will deposit the check prior to the agreed upon date, causing
the check to bounce and leading to a whole new set of problems.
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