Payday Loans

Things You Must Know About Renewal Of Payday Loan Advances

Most borrowers when fail to repay payday loan advances on the set due date often take another payday loan so that they can pay off the previous one. Alternatively, they agree to get the existing loan account renewed till the next pay day. In either case, they end up paying a substantial amount of money in terms of penalty charges and additional interest at an extremely high rate. The renewal or rollover practices that payday lenders are usually involved into do not seem to be fair. That is the reason most states have come up with specific laws regarding the same. It is very important for you to keep in mind that such rollovers or renewals are not legal in every state. Your awareness about these laws is very important when it comes to protecting yourself against these predatory lending practices. Following is a brief rundown on it.

Lenders Cannot Send The Same Check Again And Again For Collections

When you borrow payday loan advances, you are usually asked to give a postdated check to the lenders. On the scheduled due date, the lenders send that check to your bank for collections. If the fund in your bank account is not sufficient enough and the check bounces, both the bank and the lenders charge a substantial amount of money as NSF (non sufficient fund) fee. Things become much more problematic when your lenders start sending the same check again and again for collections. Due to this, you are charged NSF fee multiple times. Worse, many lenders charge an extremely high amount of money as NSF fee; they charge as much as they want. It is very important for you to keep in mind that the laws in most states prohibit such unfair activities. First, as per the laws, the lenders cannot charge more than $30 as NSF fee. Besides that, NSF cannot be charged more than once, which means lenders cannot send the same check again and again for collections. If they do, you have the right file complaint against them with the Federal Trade Commission or with your state authority.

Restrictions On Rollovers Or Renewals Of Payday Loans

Almost every state in the United States of America has also imposed certain legal restrictions on the number of times payday loan advances can be renewed or rolled over. In sixteen states, payday lending is either completely prohibited or follows a low rate cap. In most other states, though payday lending is legal, rollovers or renewals are strictly prohibited. In a few states, where rollovers or renewals are permitted, it is permitted for just one or a maximum of two times.

It is very important for you to make sure that your lenders you have borrowed the payday loan advances from are not violating these laws. If you notice violation of these laws, do not hesitate to get legal help.

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