Posts Tagged ‘payday loan laws in Maine’

Maine Payday Loan Laws

At present, Maine payday loan laws have prohibited check cashers from advancing or cashing money on any post-dated check. But, it is important to note that payday lending practices are not completely illegal in this state. Duly licensed “supervised lenders” can still offer and issue these types of short-term cash advance loans in Maine, but they must follow the legal restrictions as imposed by the law.

How Do Lenders Obtain Their License?

In order to obtain license, a lender must first post a consumer protection bond with state in the value of $50000.

Low Interest Ceilings

Though Maine payday loan laws allow supervised lenders to charge up to $5 for the first $75 of loan, up to $15 for the loan amount between $75 and $250, and up to $25 for loan amount above $250, but the laws have also specified that the annual percentage rate on payday loans under $2000 must not exceed 30%. This is quite a confusing situation for the lenders because if the APR has to be a maximum of 30%, they will never be able to charge $20 ($5 + $15) on a $250 loan (because that way, the APR will be as high as 200% or even more).

Genuine Payday Loans Not Easily Available

Only a handful of lenders in Maine are offering genuine payday loans (with low interest and without any hidden catches). Though the Internet is still bombarded with thousands of short-term quick cash advance offers for the residents of Maine, most of them are not even duly licensed or legitimate. Those unscrupulous lenders only try to take advantage of the ignorance of the majority of consumers who are not aware of the Maine payday loan laws. Therefore, awareness regarding these laws is very important if you want to make sure that your rights and interests are well protected.

The Loopholes

Because of the strict regulations and low interest ceilings, even payday lenders now hesitate to do business in this state. Still, many of them are always on a lookout for loopholes in the state laws. Though high interest payday loans are not allowed here, several complaints were filed with the state’s Bureau of Consumer Credit Protection against over sixty out-of-the-state lenders in the year 2008. Those lenders were charging very high rate of interest through their online lending programs. It is very important for you to understand that even if the lender is located at any other place (outside Maine), as long as you are a resident of Maine, the lenders must follow the laws applicable in your state. Maine lawmakers have now started posting an online list of banned payday lenders; you can find this list at credit.maine.gov, the official website of the state of Maine.

Basic Legal Restrictions

- As per Maine payday loan laws, the NSF fees on bounced checks must not exceed the actual bank fees.
- Lenders are strictly prohibited from charging attorney fees or collection costs on delinquent borrowers.
- The minimum repayment period must not be less than two weeks.
- Two loan rollovers are allowed if the borrower fails to make the repayment on the set due date, but if the borrower doesn’t pay off the outstanding dues even after the second rollover, it will be mandatory for the lenders to offer a repayment plan asking the borrower to repay in small monthly installments over a period of two years.
- The consumers cannot hold more than one outstanding payday loan in their name at one time.

The Maine Office of Consumer Credit Regulation is the main regulatory authority to impose and implement Maine payday loan laws. If you find that some payday lenders are engaged in unfair and illegal practices, you can file a complaint against them at this office by giving a call at (207) 624-8527 or by simply writing them a letter at Department of Professional and Financial Regulation, 35 State House Station Augusta ME.


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