Payday Loans Debt Consolidation

Payday Loan Laws In California

The state of California has passed certain payday loan laws in order to protect the rights and interests of consumers. People who borrow short-term cash advances often end up getting into a serious debt trap. Though these loan programs look like an easy option as almost anyone can qualify for it (even with bad credit) and get instant cash, yet these financing options can be very risky and expensive because of the high costs involved with them. You are strongly recommended not to go for these seemingly lucrative but risky programs. If you are residing in California and have already become a victim of these loans, knowledge about the state laws will definitely show you some effective ways on how to get out of the debt problem. If you find that your lender is involved in certain practices that are against the state laws, you can file a complaint against them. Following are some of the important aspects of the laws applicable in the state of California regarding payday lending.

Licensing Requirements

California have made it legally mandatory for all payday lenders to obtain license and get registered with the state. A lender who is not duly licensed cannot sue you for the payments. Therefore, if you are getting collection calls from a lending company, you must try to find out if they are registered with your state. If not, you may have an opportunity to wipe out your debts without making the payments. You can file your complaint with your state regulatory authorities or with the Federal Trade Commission.

Maximum Loan Amount And Number Of Loans At A Time

As per the payday loan laws applicable in California, a lender cannot offer more than $300 as part of these loan programs. Besides that, no borrowers can have more than one loan at a time. It means if a short-term cash advance is already outstanding in your name, you cannot qualify for another such program until you pay off all your existing dues. If a lender still convinces you to sign up for another program, it will be considered as illegal.

Repayment Period And Automatic Rollover

The state laws in California have also imposed certain restrictions on the repayment period. The loan term cannot be longer than 31 days. If the borrower fails to clear the debt before this deadline, the loan should not get automatically renewed. It means no additional fee can be charged by the lenders for any extension either in the form of interest or any other cost. The state payday loan laws do not make it mandatory for the lender to provide installment facilities to the borrower, but considering the very fact that lenders are not allowed to charge you additionally for extensions in due date, you are likely to be provided an in small monthly installments if you request for the same.

Rate And Fees

Though there are certain restrictions on the maximum rate and fees also, the costs are still very high. For every loan of $100 for a period of 14 days, the lenders are allowed to charge a maximum interest of $17.65, which is equivalent to an APR of 459%.

Rules For Collections

If the lender sends the loan account for collection, the borrower may be charged an additional NSF fee of up to $15. However, no criminal lawsuits can be filed against the debtor. Still, in case, the lender believes that the debtor is engaged in some fraudulent activities, they can file a civil lawsuit.

If you have complaints against some specific lenders, the payday loan laws in California allow you to file your complaint at the California Department of Corporations. You can either call them at (866) 275-2677 or make a personal visit to their office at Financial Services Division, 1515 K Street, Suite 200 Sacramento CA 95814.


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Posted in Payday Loan Laws, Payday Loan Laws, Payday Loans, Payday Loans Debt Consolidation | 2 Comments »

2 Responses to “Payday Loan Laws In California”

  1. [...] Posted on September 11, 2010 by backpain56 The state of California has passed certain payday loan laws in order to protect the rights and interests of consumers. People who borrow short-term cash [...]

  2. Robert says:

    Pay day loan actually push a person towards an ocean of debt. Any body facing a financial emergency think about getting instant help from the pay day lending company, but this help will become a curse for him/ her. Because of very high rate of interest, it becomes impossible to pay off the debts in time. In California, license is compulsory to offer pay day lending programs. If you have taken a loan and you find that the company is not registered with your state, you are not liable to do the payments. You can even file a complaint with FTC. California authorities prohibited its creditors to offer the loan amount up to a specific limit. The company can not offer you more than the specified amount and also another loan can not be offered to you if you already have one. The loan cannot be rolled over automatically and the repayment period can not be longer than 31 days. An alternate repayment plan should also be offered to you in case of your liability to pay the loan. The rate of interest is still very high in California. The APR is really high, some steps should be take to reduce the APR.

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