State Laws on Cash Advances Payday Loans

The government legislates and implements laws to protect the rights of its people. In the same way, it executes policies to safeguard its economy. In any industry, business owners must abide by business laws and federal policies. The government acts as a mediating body between marketers and consumers. Business law violators are apprehended by the government.

In the quick-cash industry, state governments implement usury laws for payday loans. Quick-cash, also known as payday loan, is a credit mechanism for consumers. Consumers can request for an instant cash payout for urgent and unexpected financial needs. In some states, payday loans are mostly acquired for emergency automotive repair and medical consultation and prescription. Some obtain payday loans to remedy bouncing checks and loaded credit limits.



State governments regulate interest rates of payday loan lenders through usury laws. These laws set a ceiling rate for interest charges per borrowed premium amount. In New York, payday loan lenders are only allowed to impose 25% interest charges. Hence, a $100 premium loan amount must have a $25 interest charge. During payday loan payment, a borrower is expected to return $125 to the lender. This protects clients and consumers from high-interest rate charges.

Moreover, usury laws enforce permissible lending terms for borrowers. Basically, lending companies allot two week payment period for cash advances payday loans. Lenders create agreements with borrowers for due payment through a lending contract. A borrower submits a request check to a lender indicating amount of cash advance. Lenders withhold request checks for 14 days, and keep lending contracts as a proof document of transaction agreement.



A lending contract specifies payment due date and total amount of cash advances payday loans. It indicates interest rate and mode of payment. Commonly, borrowers pay cash advances through their bank accounts. Lenders automatically get total borrowed amount from a borrower’s salary deposit. A total borrowed amount is the sum of loan premium and interest rate. Usury laws compel lending companies to disclose interest rate before the signing of a lending contract. This lets borrowers estimate total borrowed amount that will be deducted from one’s salary deposit.

Usury laws regulate transaction agreements for cash advances payday loans. Provisions on usury laws protect consumer rights, as well as uphold credibility of lending companies. The US government protects the welfare of marketers and clients in the quick-cash industry.

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