Payday loans are a great way for employed individuals to have access to cash even when payday is still a few days away. However, not all states in the country allow payday loans in order to protect their citizens.
Payday loans are legal in around 37 states and forbidden in 13 states. Some states have limitations but still, allow lenders to offer payday loans.
Where are payday loans illegal?
The 13 states include New Jersey, Connecticut, Vermont, Georgia, North Carolina, New York, Massachusetts, Arkansas, New Jersey, Maryland, Arizona, Pennsylvania, and the District of Columbia.
Where are payday loans legal?
As stated beforehand, payday loans are legal in 37 countries, including Colorado, Alabama, Illinois, Iowa, California, Kentucky, Maryland, Louisiana, Texas, Ohio, and Tennessee. In fact, payday loans are in demand in California, Nevada, and Texas.
What states have limitations?
There are also states that regulate payday loans and established a limit on interest rates like South Dakota, New Hampshire, Montana, and California. These states limit interest rates to 36% annually. These states also ban any additional fees to help citizens cope with their finances.
Georgia has racketeering laws that prohibit payday loans. There is a 25% limitation in New York and a 30% cap in New Jersey. Arkansas, however, has a tighter limitation of 17% annual interest.
There are also states that limit payday loans. For example, citizens in Virginia can only apply for a maximum of eight payday loans annually. In Virginia, borrowers must be able to fully pay in a maximum of 2 cycles only.
How to tell if a payday lender is legit?
A lender usually has a license in the state they operate in. It is important to check a lender’s license, which should always be visible in the storefront or on their website. If not posted, a borrower has the right to request to see it. The lender should readily show this license to borrowers upon request.
How to avoid payment issues on payday loans?
Payday loans are incredibly helpful when short on cash and payday is still a few days away. But it is important to pay off this loan at once to avoid added costs. A lender may offer a rollover for an additional fee, this is legal, but it could also be costly. If you can afford to pay for it on time, there is no point in not doing so. Pay on time.
When to get a payday loan?
Only borrow under a payday loan when necessary. This can be done for emergency expenses that need to be paid at once and can be covered by the next payday. If you cannot afford to pay the entire loanable amount by the next payday, it would be wiser to decrease the loanable amount to avoid non-payment.
Is it a good idea to apply for a payday loan?
If in need of urgent cash, it is not a bad idea to avail of payday loans. This is especially true if the borrower’s next payday can fully cover the loanable amount. There is nothing wrong with payday loans if done correctly because it is, first and foremost, designed to help with finances.