As per Louisiana payday loan laws, it is completely legal for licensed lenders to offer short-term cash advances in this state, but there are certain legal provisions and restrictions that they must follow. The laws have been designed in a way to provide better protection to the consumers. Louisiana is one of those states that have imposed certain laws to regulate the payday lending business. If you are a resident of this state and are considering borrowing a payday loan or are already facing certain payday debt problems, following are some important points that you must be well aware of.
Though the Fair Debt Collection Practices Act is applicable in Louisiana also, the state laws have added several additional restrictions to lenders when it comes to collecting payday debt. As per Louisiana payday loan laws, your lenders cannot file any criminal lawsuit against you if you are unable to pay off the debt in time (unless you are engaged in some serious fraudulent activities, such as providing wrong financial information to qualify for a bigger loan). Lenders are allowed to charge an NSF fee of actual bank charge just one time, but only if there is a particular clause regarding this is disclosed in the loan contract. Besides that, borrowers, in some cases, may also have to pay reasonable attorney’s fees and court costs.
No Rollovers; No Mandatory Repayment Plan
As you can see, there’s good news and bad news – the good news is that automatic rollovers or renewals of loans are not permitted in Louisiana; the bad news is that Louisiana payday loan laws do not make it mandatory for the lenders to offer an affordable repayment plan to those borrowers who are going through a financial crisis and are unable to pay the debt. However, the borrowers have also got the option (not mandatory) to pay 25% of the total outstanding balance and then enter into a new loan. You are strongly recommended not to go for this option, as it can eventually ruin your finances by pushing you into a never-ending debt cycle. Remember, the state laws have not done anything to reduce the rate of interest on these types of loans. Lenders here are allowed to charge a three digit APR; besides that, they can charge several additional finance charges also.
APR And Other Charges
If you borrow a $100 of payday loan for fourteen days, you may have to pay interest up to 650% per annum and pay finance charges up to $25. It means you will have to pay $150 after 14 days on a $100 of loan. If you are allowed to repay in 28 days, you will actually have to pay just double, i.e. $200. As per the Louisiana payday loan laws, the maximum repayment period can be sixty days. If you borrow a $100 cash advance for a full 60 days, you will have to repay more than triple of what you borrow. As you can see, payday lending programs do not just look risky and expensive and horrible; they really are. Borrowing payday loans in Louisiana is the most stupid financial moves, especially when there are several better, cheaper alternatives available, such as borrowing a short-term loan from credit unions or simply requesting an advance from your employer.
Maximum Loan Amount
Though Louisiana laws have restricted the maximum amount of loan that a lender can issue to an individual borrower to just $350, it has not been specified anywhere in the laws code that how many outstanding payday loans an individual borrower can have at one time. Overall, there are too many hidden catches involved even in the state laws. The best way to avoid payday debts is never to get into it.
If you have complaints against a payday lender or just want to get more information on Louisiana payday loan laws, you can contact the Louisiana Office of Financial Institutions. You can give them a call at (225) 925-4660, fax them at (225) 925-4548, or write them a letter at P.O. Box 94095 Baton Rouge LA 70804.