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Octomom the Latest to Endorse Payday Loans

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In recent years, several celebrities have lent their names and likenesses to services that offer consumers payday loans, a costly type of financing that can be perilous if not handled correctly, and the latest to do so is the “Octomom.”

Nadya Suleman, who in 2009 famously gave birth to octuplets as a result of in vitro fertilization, recently helped a lender launch an initiative known as “OctoLoan,” according to a report from The Hollywood Gossip. This new payday loan service will extend borrowers up to $1,000 instantly, and with no credit check. Suleman, who is better known as the “Octomom,” has 14 children and is frequently in the news.

In theory, payday loans may be beneficial for some consumers who have low incomes and little savings, but who run into financial difficulties that require immediate quick fixes. But the problem with most of these lenders is that they charge high interest rates which make them difficult to pay back and can imperil borrowers both financially and through their credit rating, the report said. The service being pushed by Suleman is no different, as it charges borrowers as much as 600 percent interest. Further, it was reported that she shot a commercial for the service, which paid her more than $10,000 for her endorsement.

Other celebrities, such as Montel Williams, also endorse payday loans, and still more have been behind promotions for prepaid debit cards which carried a number of high rates and fees not typically found in more competitive accounts. Perhaps most infamously, the Kardashian sisters tried to promote their own prepaid card in 2010, and that account would have charged users more than $100 per year in fees for normal use. It was axed before even being released.

Whenever consumers seek new lines of credit, they should always be careful to evaluate the ways in which doing so will affect their financial and credit standings. For instance, payday loan payments can be easy to fall behind on because of the high costs involved, which can significantly lower a borrower’s credit score and also put them in dire financial straits going forward as they attempt to remediate their missteps.

Image: rinkjustice, via Flickr

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  • http://msn janet

    I manage a payday loan service. We get a bad rap in the news. Most of the facts are
    incorrect. I’ve never had a 600 percent loan! That is ridiculous. It is not a trap. You pay it back on payday. No one says you have to re-write it. You cannot pay interest only. It is not just low income people. it’s RN’s, CNA’s, post office employees, teachers (who are the worst customers), city workers, bank employees, etc. Also, alot of people get on disability to keep from working and then realize they can’t make it on $698.00 per month, and go all over town getting small loans. They drive up in a big new four-wheel drive, jump out and say oh, I’m on disability. But I also work and get paid under the table. Can I count that income too? Then when check day comes, they have no money left. I find myself trying to counsel people about it and they get really mad at me. Some of my customers are older, retired people who are borrowing to help their grown kids. However, the older low income folks are the ones who will pay back the loan, because it was instilled in them to pay their bills. The females who drive up in the soccer-mom suv’s, with diamonds all over their hands, will not pay you back. You end up in court with them! I have been doing loans for nearly 16 years. I’ve every problem in the world. They can’t buy groceries, but everyone of them (and their kids) have a smart phone, internet, etc. They ask you for donations to buy their kids athletic uniforms, and they drive off in a new Camaro. Their kids that is…..

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