Payday Loans Can Help in a Pinch

Cash loans

Unsecured, short term cash loans may sound like a dream, but they can be a reality for almost anyone. Thanks to increased availability of payday loans online, unexpected expenses are no longer a cause for anxiety.

In the past, payday loans could only be secured in person, at the storefront of the lender. The borrower would write a check, dated one week in the future, for the amount of the loan, plus fees, promising to return on his or her next payday to repay the loan amount. If he or she failed to repay the loan, the lender could cash the check. Some leeway was allowed. For example, those who were unable to repay loans on the due date could roll them over, extending the loan while fees continued to accumulate.

Similar policies are now in place for online loans which can be procured from the comfort of one’s own home. Simply by logging on to a lenders site and providing credit card information, borrowers can have the loan amount directly deposited into their accounts. Lenders deduct the same amount from the borrower’s account on his or her next payday. As with standard payday loans, those who fail to repay payday loans online can see negative effects on their ChexSystems files.

The amounts given for payday loans online and in person are typically not very high, and many states impose maximum limits. In the state of Illinois, for example, payday loans cannot exceed $1000 or 25% of the borrower’s monthly gross income, whichever is less. Since short term loans are not intended to meet long-term financial needs, this is generally considered to be a sensible regulation.

Payday loans are outlawed in some states, including Arizona, Arkansas, Georgia, Maryland, North Carolina, and Washington D.C. Other states have very specific regulations regarding payday loans.

  • Connecticut outlawed usury charges above 12% for loans in 1949 and imposed a section of state law regulating small loan lenders.
  • Massachusetts outlawed online lenders only in August 2009.
  • New Jersey has had laws prohibiting usury charges for more than 100 years.
  • New York has a 1976 law capping interest rates at 16% and makes non-bank lenders charging more than that amount subject to civil prosecution. Charging more than 25% interest could lead to a Class C felony carrying a maximum sentence of 15 years.
  • Pennsylvania doesn’t specifically outlaw payday loans, but the Consumer Discount Company Act limits consumer loans under $25,000.
  • Vermont introduced legislation in 1980 prohibiting usury charges which was supplemented by a 2012 law making it illegal for unlicensed lenders to operate in the state.
  • West Virginia implements state codes limiting interest rates which make payday loans unprofitable in the state.

In all other states, however, citizens are able to secure short-term, cash loans to get them through tough weeks fraught with unforeseen expenses. Whether consumers choose to secure payday loans online or in person, they can rest assured that unexpected car repairs, medical bills, and other unpleasant surprises don’t have to cause trouble.

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