Like many laws in the United States of America, payday loan laws vary from state to state. Each state passes regulations and bills that help to regulate the payday loan market in a way that is beneficial to them. Some states have lenient restrictions on payday loan laws in order to encourage free market forces to work, while others prefer to rein in predatory lending with more oversight. Knowing the state payday loan laws where you life is an important way to protect yourself from falling victim to predatory lending or debt that might make your life unpleasant. Below we will offer a few tips that will help you to research state payday loan laws and links to information on your state.
General State Payday Loan Laws
There are a number of state regulations that have implications for how payday lenders work in each state, but there are a few similarities you should be aware of. Most states have a minimum and maximum level for the term of the loan. Some states offer a minimum of 5 days while others offer 10, but these rules will change the way you do business with payday lenders based on your state. Another indicator you should look for is the minimum and maximum amount that a lender can give. In some cases the payday loan lender can only give $500 to a borrower, while in other cases the laws at set at a percentage of the gross monthly income of the borrower. Each state has a different regulation. In fact, some states ban payday loans altogether.
Fees and finance charges are another commonly regulated aspect of payday loans. In order to prevent incredibly high interest rates, many states set an upper cap on the amount that payday lending companies can charge. Although lobbying in each state has made it possible to still extract over 400% ARP, this is still an upper limit that could be much worse if the free market could continue.
Licensing and Liabilities for Payday Lenders
Consumers also have to make sure that they realize which online payday loan lenders are licensed and registered with the state that they reside. Each state usually only has a few online payday lenders (with a few exceptions), so it is imperative that you determine whether or not an online company is acting illegally by lending you money. In many cases this can lead to extremely high interest rates that land you in thousands of dollars of debt for only a small loan. Do not fall victim to these types of shady practices. Instead, make sure all of the laws are being followed with your storefront or online payday lenders.
As each state is different, we have compiled a list for you to consult every time you have questions about payday lending laws in your state. Hopefully it will provide useful for you to better understand your rights and protect yourself from predatory lending that has already hurt so many individuals and families.