Payday Loans and Consumer Protection
Posted on Tuesday, July 27th, 2010 at 3:43 pm in Cash Loan Info by State
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As payday loans and online cash advances gain popularity, numerous consumer groups have petitioned state governments to tighten regulations on short-term payday lending. Currently, 38 states in the US allow both storefront and online payday loan lenders to operate under a certain set of legal restrictions. Twelve states ban storefront payday lending but place no restrictions on online lenders. States that ban storefront lending but allow online payday loans include Connecticut, Georgia, Maine, Maryland, Massachusetts, Michigan, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia. A consumer can apply for an online payday loan in Pennsylvania and the other listed states but cannot visit a lending store for instant cash loan services.
States have put payday loan laws in place to protect consumers from bad lending and borrowing practices. A dishonest payday lender might overcharge a customer in service fees, resulting in triple-digit interest rates if the customer wishes to renew the loan or extend the terms to allow some extra time for repayment. A bad lender might conceal these interest rates by not displaying the annual percentage rate and not providing up-front information about fees for renewing or rolling over a payday loan. Borrowers can also create a bad experience for lenders by borrowing more cash than they can afford to pay back and taking out several loans to pay other creditors.
State payday loan laws exist to protect both lenders and borrowers from bad lending practices. Many states limit the interest a payday lender can charge, and many others limit the number of loans a consumer can apply for in a calendar year to reduce the potential for borrowing abuse. Check your state’s payday loan regulations to make sure you’re borrowing your cash advance loans safely and legally.
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