Thirty-seven states in the US have authorized payday loans through specific laws, such as Alabama, Colorado, California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Ohio, Tennessee and Texas. Payday loans are not allowed in all states and if they are available in your state, they are illegal. With a high APR and the consequences of default, fast loans are risky and authorities regulate them to prevent further financial problems from occurring. Some states have laws that limit the amount of loans a borrower can apply for at one time.
According to the LaTimes report, states with a loan limit with a 36% rate are Alaska, Arizona, California, Colorado, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Montana, New Hampshire, Oregon, Ohio, South Dakota, Virginia and Wyoming. A monthly maintenance fee may be charged for each month the loan is outstanding after the first 30 days of the loan. There is also an administrative fee of 50 cents to cover the costs of lenders verifying whether a borrower is eligible for the loan. The study also found that people with higher incomes are more likely to use payday lenders in areas that allow reinvestment.
Illegal states that currently completely prohibit payday loans include Vermont, New Jersey, Arizona, Connecticut, Georgia, Arkansas, Maryland, New Jersey, New York, Massachusetts and North Carolina. If you're not sure if your state allows payday loans or how they work in your area, continue reading below. The U. S.
government has decided to ban payday loans in some states meaning that payday loans in those states are completely prohibited by law and their citizens cannot apply for payday loans. Once a loan is repaid under the new law the borrower must wait 10 days before getting another payday loan. The NerdWallet website helps redirect potential payday borrowers to non-profit organizations with lower interest rates or to government organizations that provide short-term assistance. In addition federal agencies should support state reform efforts by preventing single-payment lending at the national level curbing other harmful credit practices and ensuring that diverse providers including payday lenders consumer finance companies financial technology firms banks and credit unions offer safer lower-cost installment loans instead of loans with global payments. In the case of early repayment of a loan subject to this section the installment account management fee is subject to repayment in accordance with subchapter H. By adopting balanced reforms Colorado Hawaii Ohio and Virginia have reduced the cost of small loans provided essential consumer protections and maintained the availability of loans.
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