If you have ever driven around the proximity of a military base you will see certain types of businesses waiting for our service men and women to come on in. These businesses are not illegal; however they do have a reputation as bottom feeders. So why do the congregate around military bases? The sad truth is most military personnel do not get paid well so they are a segment of our society that is sometimes seen as an easy target.
As you’re driving count the Check Cashing outlets, Payday Loans stores, and Pawn Shops. These merchants are well known for high fees, outrageous interest rates, and undervalued deals that many times trap our military personnel in a vicious cycle of debt, and poor financial decisions.
Payday Loan stores – We all know military pay is on the low side of our economic scale so it’s not surprising that during a short term emergency these folks may need a quick influx of cash. Many times they go straight for the convenient payday loan store where they take out a loan. If the cannot pay out during the first cycle they renew and can end up paying interest rates as high as 650% in some states. As an alternative, they should take advantage of financial counseling services provided on base, or use a more traditional financial institution like a bank or credit union and take out a short term loan with more reasonable rates.
Check Cashing outlets – These outlets turn a profit by charging a check cashing fee for their service. The problem is the same check cashing services may be available more economically at banks and credit unions. Many bases will also have a military exchange that will cash checks for free until you have time to establish new accounts.
Pawn Shops – Off base pawn shops consistently undervalue property offered as collateral. Many of them also offer title loans, which come with very high interest rates and can very easily lead to the loss of your vehicle. None of these options are the best for the military consumer; they should explore other alternatives for their short term cash needs. For example, there are military lenders that provide alternatives to military payday loans (with great rates).
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