Payday Loans

Massachusetts Payday Loan Laws

Extremely high rate payday lending programs are strictly prohibited in the state of Massachusetts. As per Massachusetts payday loan laws, check-cashing agencies and any other financial institution must first get licensed under the Small Loan Act in order to be able to offer these types of loans. A specific small loan rate cap applies here, as per which, no payday lenders in Massachusetts can charge more than 23% per annum of interest on short-term cash advances. Besides that, they can charge a maximum of $20 as administrative fee but only after the loan is granted.

Most Lenders That Offer Payday Loans To Massachusetts Consumers Operate Their Business From Internet

When you search online for Massachusetts payday loans, you will receive hundreds of websites that offer such loans for the residents of this state, but it is very important for you to keep in mind that very few (almost none) of them have their offices in this state. Most of them operate their business from Internet in attempt to avoid getting caught under the claws of Massachusetts payday loan laws that are very strict against illegal payday loan lenders. In order to be able to offer short-term cash advances in this state, the lenders must first obtain a proper license and must have their physical office in the same state. Therefore, if you are considering borrowing a payday loan from an Internet lender, make sure that they are duly licensed and have a physical office where you can contact them personally. Most importantly, make sure that they are not charging you interest or administrative more than the set maximum limit under the state laws.

Important Points That The Loan Contract Must Include

Massachusetts payday loan laws have made it mandatory for the cash advance lenders to include the following items in the payday loan contract before issuing any loan.

- Everything must be written in the agreement in a language that is easy to understand. To make things simpler and clearer, the lenders have also been advised to use examples wherever appropriate.
- The due date of the loan, the total amount of loan issued, and the full name and address of the lender.
- There should not be any pre-payment penalty. It means the borrower must be given an option to repay the loan, if they want, anytime before the due date without paying any additional charges.
- The repayment period must not be longer than 14 days.
- If the borrower fails to repay the loan on the set due date, the loan must not be rolled over. Instead, it should straightaway be sent to the collection department. No further interest can be charged for a loan account that is collection status.
- The APR on Massachusetts payday loans must not exceed 23% in any case.
- The terms of the loans, such as the interest rate, fees applicable, and repayment obligations must be explained clearly.

If your lender is not following the Massachusetts payday loan laws properly and if you think that your legal rights are being violated and that the lender is harassing you illegally, you can file a complaint against the lender with the Massachusetts Division of Banks, which is the official regulator for these types of lending programs in this state. You can fax them at (617) 956-1599, call them at (617) 956-1500, and/or make a personal visit to their office, which is located at One South Station Boston MA 02110.


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