Rollovers

No Rollovers and Refinancing are completely different thing. Rollovers are applicable for Payday Loans.

What is Rollover of Payday Loan?

Suppose you have taken Payday loan of $100. As a fee you have to pay $25 (say). Now, if you fail to repay the loan within the prescribed time period then you can extend the payment time by paying an additional fee of $25. This is known as rollover. Here, the total cost for rollover will be $150.

All three of the companies you are dealing with are not payday loans in Florida. They are Credit Service Organizations.



All three companies you are dealing with are registered as CSO's in Florida.

They are exempt from the payday loan laws of Florida, since they are not payday loans. They would not be exempt from the interest rate cap, but since Federal Law says their fees can't be considered interest, they charge a large fee and very little interest to stay under the cap.

Those are the registrations for each of the companies.

They are all 100% legal in Florida.

Dear Goudah and Unabridged,

I was not aware of CSOs before going through your posts. But I have certain questions regarding this: -

1. When a person is taking any sort of payday loan through a CSO, then what is the process of making payment? --- is it lump sum and one time, as in case of a normal payday loan, or partial or through monthly payment?

2. In the first post done by Unabridged you can see that he has taken three loans from 3 different CSOs. But in each of them he has made partial payment---How is it possible? So, what is the repayment pattern?

3. If a person gets loan through a CSO, then does the borrower make payment to the ???????unregistered??????? lender directly or through the CSO?

4. How does the reference of Refinancing come here?

Regards,

Phoenix

I will try to answer your questions as best i can.

1. It's just like a normal pdl, where you have the option of paying in full, or just paying the fee and extending the loan.

2. I don't believe he has made partial payment. I believe he has extended the loans numerous times. That would mean he only paid the fee, and would still owe the whole principle plus another fee. So the amounts he's posted as having paid are all fees to extend the loan, I don't beleive he has paid anything towards the actual principle of the loan.

3. When you take a loan from the CSO, the CSO handles the whole transaction. You never talk to the "lender", you don't even know who the "lender" is. Everything goes through the CSO.

4. Refinancing/rolling the loan over is illegal for Payday Loan companies to do in Florida. But CSO's are not pdl's, and do not have to follow those laws. They have their own set of very short laws they must follow, which pretty much lets them do as please.

CSO's do have to adhere to state laws capping interest rates. But federal law says that fees charged by a CSO cannot be figured in as interest, so they will charge a huge fee, and then only like 12% interest on the loan.

Dear Goudah,

Thanks for your answers.

I have some other related questions too: -

1. How could I know that a company is a Payday loan Lender or a CSO? What are the things shud I verify regarding this?

2. What are the things should verify at the time of taking a short term loan from a CSO?

Regards,

Phoenix

Dear Goudah,

I have a confusion regarding CSO. Can you please help me to sort it out?

In your first post of this thread you had given a quote on CSO whose last line said: -


In your last post of this thread you said: -
Quote:

Okay, here's my answers :D

1. It would say in your contract that the company was a Credit Service Organization.

2. Taking a loan from a CSO is just like getting a payday loan. Stay away from them, because you have even less consumer protections with CSO's then with payday loans.

1. No, for instance in Florida, they charge a fee of $25 per $100 borrowed, and 12% interest. You would pay this fee everytime you extended your loan.

2. The CSO is usually paid like a payday loan, on your pay dates.

3. Nope, the options are usually to pay the fee and extend the loan, pay it off in full, or pay the fee and a percentage of the loan to pay down the balance.

4. See #3

5. The interest rate is for the year. The payment is done just like a payday loan, where the balance is due in full, or you can pay the fee and extend the loan.

When i say they charge a huge fee and 12% interest (as an example), I mean that they charge like $25 per $100 borrowed as a fee, then 12% interest (over the year) for a 2 week loan. The interest is only a few cents, but the fee is huge.

They use the federal case to get around interest rate caps. Since their fees cannot be considered interest, they have a large fee.

Thank you Goudah for all your answers.

Thanks a Ton.:-)