When you're in need of quick cash, payday loans can be a great option. But with high interest rates and fees, it's important to understand the maximum amount you can borrow in California. Cashback Loans offers online payday loans in California, allowing you to apply for a quick loan when you need it most. The average annual percentage rate (APR) for payday loans is 372%, which is much higher than other types of loans or credit cards.
Last year, more than 23 million people used at least one payday loan. The House Financial Services Committee also introduced a federal bill in May that would limit the APR rate on payday loans nationwide to 36%. This is approximately double the current APR for credit cards. With Earnin, the amount you borrow is automatically deducted from your checking account on your next payday.
Consumer loans, also known as installment loans, are similar to payday loans but usually involve smaller amounts of money. Unfortunately, many borrowers have difficulty repaying these loans when they come due. To prevent debt traps, some states have laws that limit the maximum amount for payday loans. Banks are not subject to interest rate limits and some have been helping payday lenders avoid these limits in other states.
In January, a coalition of 88 groups called on the FDIC to crack down on this practice. Consumer advocates have long criticized payday loans for trapping borrowers in a cycle of debt. In terms of annual percentage rates, it's not uncommon for payday loans to exceed 500% or even 1,000%. Some states even limit the number of payday loans a borrower can have outstanding at one time.
It's important to consider all your options before taking out a loan. If you have a friend or family member who can help you out financially, it may be a better option than an expensive loan. Diego Zuluaga, a policy analyst at the libertarian think tank Cato Institute, said at the May congressional hearing that the United Kingdom enacted a similar interest rate limit for payday loans.