Win the lottery.

That’s our advice, if you decide that the only way you can make ends meet is by taking out what’s called a payday loan. You’ll likely need those lottery winnings to pay off that kind of debt.

The term “payday loan” applies to short-term borrowing, usually for a period of two weeks. It is referred to as an “open-ended” line of credit. Under Maine law, lenders may charge a flat fee of $15 on loans of $100 to $250. Annual percentage rates are capped at 30 percent. That’s a rate that William Lund, superintendent of the Maine Bureau of Consumer Credit Protection, calls fairly generous.

The problem with this kind of loan is reflected in its name. If the payday is the due date for the payoff, the borrower will more often than not find less than enough money in his or her paycheck to meet expenses and pay off the loan.

That’s what many Internet-based lenders — many of whom do not have the required licenses to do business in Maine — are counting on. The shady ones ignore Maine’s rate caps as well as licensing rules in perpetuating what Lund calls the “debt cycle.”

After enticing cash-strapped consumers, the Internet lenders get a checking account number. That allows them to deposit the initial loan electronically and later to withdraw interest payments and, in some cases, the principal. Usually, however, the consumer can’t afford to pay off the loan, so the lender takes only the interest payment. The loan is renewed for another two weeks, and on it goes.

Many consumers are in debt to multiple lenders by the time they call the bureau with debts sometimes running into thousands of dollars. Lund says the out-of-state-based payday lenders might charge $30 per week on a $100 loan, far above Maine’s flat rate, which was set to allow lenders to cover administrative expenses.

The bureau dealt with complaints on about 60 different Internet-based lenders last year, and Lund expects that number to increase in 2009. He advises consumers who complain to his department about unscrupulous lenders to close the checking account from which the lender is taking funds. Lund also advises borrowers to ignore threats that their case will be turned over to a debt collector (often a related company with, again, no right to operate in Maine). And Lund says threats of litigation to collect debt are usually empty, since district attorneys around the state would likely not help an unlicensed operation to collect a cent.

When we spoke on Friday, Lund was preparing a news release on the subject of payday loans. We urge consumers to read media accounts carefully and take the superintendent’s cautions to heart.

Northeast CONTACT is not indicting all forms of short-term lending. We are simply saying to would-be borrowers, “Know what you’re getting into.” Understand the terms and ALL of the costs before signing anything. If you need help, call the Bureau of Consumer Credit Protection at 800-332-8529 (800-DEBT-LAW) or on the Web at www.credit.maine.gov.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or e-mail contacexdir@live.com.