Payday Lending Laws In Washington
With effect from January 1, 2010, several changes have been introduced to the payday lending laws in Washington. Whether you are struggling with the debt caused by these short-terms cash advances or considering borrowing one, if you are residing in Washington, you must be well aware of these laws. Following is a brief rundown on some of the major aspects associated with the same.
Limitations Regarding The Maximum Amount Of Loan
You cannot borrow more than 30% of your gross monthly income. Besides that, the amount should not be more than $700 in any case.
Number Of Loans
The number of loans you can borrow per year has also been restricted to eight only. Now, you cannot take more than eight short-term cash advances during a one-year period.
Recording Of Loan Information
Every time you take a payday loan, the details must be registered in a statewide database.
No Automatic Renewal Of Loans – The Option For Installment
The best part of the new changes is this – if you cannot afford to make the repayment on the set due date, the loan will not be renewed; instead the lender must allow you to pay the dues in several easy installments without charging any penalty or additional interest charges. Besides that, if there is a payday loan still due in your name and you are following an installment repayment plan to pay it off, you will not be able to qualify for another loan.
Debt Collection Harassment
The have also become stricter regarding debt collection. You can now directly file a complaint with DFI in case a lender intimidate or harass you in an attempt to collect debt. You can also file an online complaint at http://www.dfi.wa.gov/cs/complaint.htm.
Licenses For Payday Lending
A company must obtain a license from the Department of Financial Institutions in order to be legally able to offer payday loans in the state of Washington. Consumers can call 1-877-RING-DFI (746-4334) to verify if a particular lender is duly licensed or not. The licenses can also be verified at https://fortress.wa.gov/dfi/licenselu/dfi/licenseLU.
The Repayment Period
As per the new payday lending laws in Washington, the repayment period cannot be longer than 45 days. There is no restriction on the minimum period.
Maximum Fee Or Interest
Whether it is interest or any other charge, the overall fee should never be more than 10% if the loan amount is above $500 and not more than 15% if the loan amount is $500 or less. It is important to note that this not an annual interest rate – it is not 10% per annum or 15% per annum. No matter whether the repayment period is one month long or just as short as one week, you will be charged at this rate. For example, if you borrow $500, you will have to pay $575 ($500 + $75), and if you borrow $700, you will have to pay $770 ($700 + $70) on the set due date.
It is important for you to keep in mind that all these payday lending laws are also applicable to those who are based in this state but are doing business through Internet. If your existing lenders have not followed these rules, you have a case; you can file a lawsuit against them. This way, information about these laws is useful not only for those who are considering taking payday loans but also for those who have become a victim of these expensive loan programs.