Payday Loans

Are Your Payday Loans Lenders Following The Federal Truth In Lending Act?

Payday loans lenders issue small amount of cash advances to consumers for a very short period of time. These lending programs are advertised as an easy way to get instant cash, but there are certain risk factors also involved with the same, which you must be well aware of. The Federal Truth in Lending Act all types of lenders, including those who issue payday loans, to provide full disclosure in clear terms to the consumers about the cost associated with the loans. However, it is important to note that this act does not impose any maximum limit on the rate of interest or penalty fees that a lender can charge. It is just that all the provisions of the loans must be clearly disclosed in the agreement. There must not be hidden clauses.

Full Itemization

As per the Federal Truth in Lending Act, it is legally mandatory for payday loans lenders to provide full details of the amount of money that is being issued (the actual principal amount) and the actual amount of money that the borrower will have to repay on the scheduled due date.

Annual Percentage Rate

When you borrow a payday cash advance, you have to sign an agreement with the lender. This agreement must clearly mention the actual annual percentage rate that will be charged on the loan issued to you. If additional finance charges are also applicable, the same should also be mentioned in clear terms. There must not be any scope for confusion. You are advised to read the fine prints thoroughly before you sign up. If you find anything suspicious or have some queries, you must get things clarified in writing.

Penalties And Rollovers

The agreement must also explain the collection practices used by payday loans lenders. It should tell you what to expect if you fail to repay the loan within the set due date. What will be the penalty charges? How many times the check submitted by you will be sent for collections? How many times the NSF fee will be charged and how much? Is there any provision to extend the repayment period? If yes, will you be charged interest for the extended period of time? If yes, how much additional interest you will have to pay? Will you be charged interest for the extended period of time at the same APR? When you know all these things beforehand, it will be very easy for you to make an informed decision whether you should borrow a payday loan or look for better alternatives. Make sure that all the terms and conditions of the loans are in compliance with the payday loan laws applicable in your state.

Last, but not the least, it is also very important for you to keep in mind that you have three days from the date a loan is issued to you to cancel the transaction. It means if you change your decision and choose to opt out of the loan agreement with the payday loans lenders, you have the right to do so within that three-day period.

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