If you’ve found yourself in the unfortunate position of needing to take out a payday loan, knowing your state’s laws can save you a ton of hassle and money. Most states require lenders to make borrowers aware of applicable laws, but all too often, lending agents skim over important details, or don’t mention them at all. Legally, as long as they have your signature and initials on all of the documents, there isn’t much you can do to prove they didn’t share pertinent information with you.
It’s not difficult to dig up the laws in your state concerning payday loans. Check here for a state by state rundown of the current laws regarding payday loans. The regulations are explained in simple, layman’s terms that just about anyone who reads this article should be able to understand.
Many states have caps on how much interest lenders can charge, and several others have provisions which allow for borrowers to get out of the cycle of reloaning by choosing to pay the loan back over a set period of time, more like a traditional loan. Of course, some of the lending companies will refuse to lend to you again if you do this, and this is their right. But, at least it offers you the opportunity to get out of a bad situation before it really gets out of hand.
Some states have outright banned payday loans, and others are considering legislation to do so. You’ll have to decide whether or not you think that’s a good idea. Our take is that regulations and limitations are necessary to keep some semblance of fairness in the payday loan industry, but outright banning them can also be harmful to people who need them: mostly the working poor when they are faced with an emergency.
It’s never a good idea to take out a payday loan that you don’t absolutely need. While the companies will advertise the loans as a great way to pay for a vacation, have extra spending money, or any other number of frivolous uses, common sense will tell you that paying high interest rates on a short term loan is a really bad idea except in a genuine emergency
Even then, you should pay off the payday loan right away. If you can’t afford to pay off the payday loan in one payday, you should really ask yourself if this is truly a matter of life or death. And if it isn’t, skip the loan.