Payday Loans Debt Consolidation

Legal Provisions Applicable As Per Alabama Payday Loan Laws

Almost every state now has enacted certain laws regarding the process of payday lending. Alabama also have an array of legal provisions regarding some common issues associated with these types of lending programs, such as interest rate, penalty charges, other fees, number of loans, repayment period, provisions regarding non-payment, and other such things. But, many provisions are still not very favorable to the borrowers. Following is a brief rundown on the various aspects covered under these laws.

The Basic Provisions

Alabama allows payday lenders to charge a maximum of 10% of the actual loan amount as interest. Besides that, an additional fee of $10 can also be charged as processing fee and an additional $5 for the ID card. If you borrow a loan of $500 with these rates for two weeks, you will end up paying $65, which is an APR of 312%. The good thing is that Alabama payday loan laws restrict the maximum period to repay the loan to 31 days; the minimum period is 6 days. Automatic renewal in case of non-payment is strictly prohibited, but many lenders are still involved in such practices, as they often succeed in finding certain loopholes in the laws. As per the laws applicable in this state, you cannot borrow more than $400 as part of these loan programs.

Restrictions On The Maximum Number Of Loans

Alabama restricts the maximum number of loans to just one per borrower per location at a time. If you look at this provision closely, you will see some obvious loopholes. You cannot take more than one loan at a time at the same location, but you are allowed to have another loan at a different location. Most of these lenders have branches in different areas. Since these loans are commonly offered online, the lenders often encourage you to borrow multiple “easy” loans from different branches from different locations.

What Does No Rollover Mean?

As per Alabama payday loan laws, if a borrower fails to make the repayment within the time limit, the lenders cannot offer renewal or . The loan goes into collections, where you may be liable to pay other charges, such as a reasonable attorney fee, court costs, and the insufficient fund fees resulting from check bouncing. The lenders are also prohibited from taking any criminal action against the borrowers, but they can file civil lawsuits if needed. But again, there is another provision that allows criminal charges to be placed against the borrower if he/she intentionally closes the bank account in order to avoid the payment that eventually resulted in check return.

Alabama payday loan laws consider these lending programs legal but only check cashing companies are eligible to offer payday cash advances.


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

One Response to “Legal Provisions Applicable As Per Alabama Payday Loan Laws”

  1. Kelvin says:

    Alabama state authorities are trying to save their consumers from the predatory nature of pay day loans but the rules which are applicable in the state are not very much strong. The lenders can take benefit from the look holes present in laws of the state. The Annual percentage rate is restricted to a certain limit but it can not be done for every time. Lenders can charge more than the specified limit very easily. They will charge more than the specified limit very easily. They will charge extra money by the name of various charges etc. The best thing is that the renewal and roll – over is strictly banned if the borrower can not pay back in time, the loan amount can not be rolled – over automatically but some lenders finds any alternative for doing so. The number of loans is also specified but a big problem is there. One person can take a loan at a time from one location but if you can want to ditch the law, you can take another loan from the other location also, you can get multiple loans at a same period of time. If consumer can not repay the loan, the loan will go in the collection status and then they have to go for debt consolidation

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