Payday Loans

Alabama Payday Loan Laws

Because of the safe harbor legislation, usury and/or small loan laws do not apply to payday loan lenders in the state of Alabama. As per the Alabama payday loan laws, it is completely legal for lenders to offer short-term cash advance in the form of single payment loans on the basis of post-dated checks written by the borrowers on their bank accounts at triple-digit APR. Still, some legal provisions have been made to protect the rights and interests of the borrowers. Following is a brief rundown on it.

How Much Lenders Can Offer?

The maximum amount of money that lenders can offer in Alabama as part of a short-term cash advance program is $500. If they offer you more, the laws make you liable to pay only the principle amount (for the extra money other than the first $500) without any interest or financial charges.

No Criminal Lawsuit Can Be Placed Against You

If you fail to make the repayment because of some valid reasons, the Alabama payday loan laws prohibit lenders from filing any criminal lawsuit against you unless you are engaged in some fraudulent activities. Always remember, in general, you cannot be sent to jail for the non-payment of payday loan debts. The only situation when criminal charges may be placed against you is when you close your bank account without notifying the lenders properly about it and the check returns because of it.

Collection Fees

If your account is in collection status, the lenders can charge one $30 NSF fee. Besides that, they are also allowed to charge you additionally for attorney’s fees or other court costs, but such charges must not exceed 15% of the face value of the check.

Just One Rollover Is Permitted

Alabama payday loan laws prohibit cash advance lenders from putting you into a never-ending cycle of debt by rolling over your loans every month. If you are unable to make the repayment, your loan may get a maximum of just one rollover. After this, the lenders must not charge any additional fee or interest.

Borrowers Are Entitled to A Repayment Plan

If you are in a difficult financial position and are not able to make the repayment in full through a one-time lump sum payment, you have the legal right to request the payday lender to provide you an affordable repayment plan so that you can pay off your loan easily. The Alabama payday loan laws have made it mandatory for the lenders to work out a reasonable and affordable repayment plan (in several easy monthly installments) to those borrowers who are otherwise not financially strong enough to repay the loan.

There Is No Limit On How Many Outstanding Loan Accounts You Can Have At A Time

There is no limit on how many outstanding payday loan accounts you can have at a time, but it is important to note that the total amount of loan must not exceed $500 in any case.

High APR Is Allowed

The state of Alabama has not made any effort to reduce the high APR. It is completely legal for payday lenders here to charge a 3-digit APR on short-term cash advances. For a $100 of loan issued for 14 days, they can charge interest at a rate of up to 456.25% per annum.

Maximum Limit On Finance Charges

The maximum amount of money that lenders can charge as finance charges must not exceed $17.50 on every $100 of loan with a repayment period of 14 days. If the borrower makes a default, the lenders can charge an additional 3% per month.

Repayment Period

The repayment period must not be less than ten days and greater than thirty-one days.

Last, but not the least, it is very important for you to understand that even if your lenders belong to any other state but as long as you are a resident of the state of Alabama, the Alabama payday loan laws will be applicable for your short-term cash advance accounts.

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Posted in Payday Loan Laws, Payday Loans | 1 Comment »

One Response to “Alabama Payday Loan Laws”

  1. Robert says:

    The state of Alabama has imposed its own state specific laws about pay day lending. In this state it is legal for the creditors to offer pay day loans against the post dated checks at very high interest rate. State of Alabama has some specific restriction about the maximum amount of money. One can take from the lenders as a short term cash advance. The most important thing is that only one automatic roll-over is allowed in the state, the roll-overs are the actual cause of converting pay day loan into a big monster. The creditors can go for one roll-over only after that they can not charge any additional fee or interest from you. The creditors have to offer you another repayment plan if you find yourself unable to do the repayment. The state has not done anything to do some thing with the high APR. The lenders can charge very high APR legally. Finance charges are restricted to a certain limit and the repayment period id also specified in the state laws. The most important fact is that if you are living in the state of Alabama and you have take cash advance from a lending company of another state.

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