Payday loans are not really the exact alternative to the home loans or car loans but they are equally useful when the tough time hits. These are short term loans and the amount could be anywhere between $100 and $1500. The repayment period is short and the fees are fixed. There are no hassles like submitting documents or going through credit check. Fast and no credit check payday loans are available from many lenders these days.
State regulation for payday loans
As internet payday loans are small unsecured loans, they are largely governed by the regulations set by the state government. Many of the states prevent the lenders from levying hefty interest rates on the borrowers. The rate of interest is capped to 24% to 48% under the state laws. This helps the customers to pay back the cheap payday loans in small installments over a reasonable period of time. Some of the states protect the borrowers with the ‘criminal usury laws’. For the state of New York the cap for criminal usury is 25%.
Know the loops in state laws for payday loans
Though there are many states that have protective laws to take care of customers’ interest under the payday loan schemes, there are always certain lenders who discover a new way to bypass the laws and rip off the borrowers. These lenders keep the rate of interest within legal bounds, but they add multiple fees which sum up to a hefty amount. The revised law that protects consumers has been implemented and the government has actually stopped the lenders from charging any fees that is not legal. The current economic situation has prompted certain states to limit the number of payday loans a borrower can go for.
Some states are not only restricting amount of online payday loans that is taken within a period but they are also imposing restriction on how many times a loan is renewed. It is totally up to the lenders to extend the period of the loan and they may also lower the rate of interest in certain cases.
So before you go for payday loan, make sure to learn the state laws levied on it.