It is no secret that payday loans
are everywhere – in storefronts, on the Internet and in your Yellow Pages. A payday loan is a small, short-term loan that is intended to be paid back on the date of your next paycheck. Most payday loans have high interest rates because this is the only way that the payday loan companies can make money, since the term of the loan is short.
Most recently, payday loan companies have begun to target military personnel and their families. Military personnel and their families are particularly vulnerable to payday loan companies because their lives are disrupted by the changes in living conditions and in pay. When a new military recruit heads off for basic training, heaving his or her family behind, the income generated by the military is around $1,200 per month. Faced with this hardship and possibly no alternate stream of income, military families turn to payday loans.
Although it is not only military personnel and families who fall victim to payday loan scam, they are at a higher risk, says the Center for Responsible Lending.
For one thing, many payday loan companies are targeting military personnel and their families. Rather than advertising to the public in general, they focus their pitches on the military, making these officers even more likely to take a risk. The payday loan companies appeal to military personnel by:
– Opening storefronts in close proximity to military bases;
– Hiring former military officers to work in their offices;
– Advertising specifically to military officers and their families; and
– Naming their payday loan franchises with military connotations(i.e. Military Payday Loans, Armed Forces Financial).
Faced with this type of advertising, military personnel assume that it is the normal thing to do. Without substantial funds to send home to their families, they turn to payday loans as a reprieve from income problems.
What they do not understand, however, is that payday loans can quickly become substantial debts that are all but impossible to pay back. Interest rates combined with other late payment fees can double or even triple the amount by the time the second pay period has gone by. And nonpayment of any debt by a military officer is punishable via the Uniform Code of Military Justice (UCMJ), parts 123a and 134, which state that the “making, drawing, or uttering check, draft, or order without sufficient funds” may be punishable by:
– Dishonorable Discharge
– Court Martial
– Loss of Security Clearance
There are other options that military personnel and their families can pursue to solve temporary financial troubles. Contacting the financial institution where they hold a checking or savings account is one possible option. Others include approaching family members, talking with a credit counseling services, requesting an advance from an employer and contacting emergency assistance programs.