US Laws Regarding Military Payday Loan Debt
If you are trapped into a fast growing military payday loan debt, there are plenty of things that you need to take into your careful consideration. To start with, you must first educate yourself about the laws applicable in the United States of America regarding these types of loans. It is quite unfortunate that the majority of payday loan lenders are unscrupulous ones and they are involved in various illegal activities. In fact, this is mainly because of the rapidly growing instances of payday loan scams that even the Federal Trade Commission (FTC) has warned consumers against it. Therefore, if you want to protect yourself against those scams and seriously want to get rid of your debt problems, you must do a thorough review to find out whether your lenders are abiding by the US payday loan laws. Following is a brief rundown on some of the major aspects associated with it.
Maximum Interest Rate
As per the laws introduced in 2007, the interest rate charged on military payday loan debt must not exceed 36% per annum. The legally allowed interest rate in this case is very low as compared to the payday cash advances available for general public, where lenders freely charge 3-digit APR (which can go as high as 700% per annum). But, despite the comparatively low rate, you are still not recommended to go for it because the structure of these loan programs have been designed in such a way that makes it very difficult for the borrowers to make the repayment in a timely manner. And, once a borrower misses the due date, he or she gets trapped into a vicious cycle of debt. Therefore, if you really need small amount of instant cash to meet some financial emergencies, you should consider better alternatives, such as taking an advance using your credit card, requesting an advance from your employer, or even requesting a favor from your friends or relatives. Most importantly, you must understand that people face cash crunch mainly because they are financially indiscipline and they do not have a proper budget to follow. Therefore, in order to avoid such problems, you are strongly recommended to rework on your budget. You must always maintain an emergency savings fund.
There Must Not Be Any Hidden Provisions
As per the laws, lenders must disclose all the terms and conditions about military payday loan debt clearly through a written loan contract. This contract must be duly signed by both the parties. Many lenders try to attract consumers by claiming to offer cash advance loans at an unbelievably low rate, but with an * sign. This * sign means certain conditions apply and that the advertised low rate has a few catches associated with it. Lenders are legally obligated to explain all those hidden provisions very clearly (in an easy to understand language) under a specific ‘disclosure section’. So, do not forget to check this disclosure box, as it will get you the true picture about the actual cost of the loan in question. If your lenders are involved in certain activities that have not been mentioned in the contract, you can file official complaints against them.
No Prepayment Penalties
The US military payday loan debt laws also prohibit lenders from charging any pre-payment penalties. Therefore, if you are considering paying off a few payday loan accounts before its due date, you should be able to do so without having to pay any penalty charges.
Rollover Is Allowed Only If It Offers Better Terms For The Borrowers
In general, military payday loan companies are legally not allowed to renew or rollover a loan account in case the borrower fails to make the repayment on the set due date. As part of the rollover process, the due date is extended for an additional one month of period and you are also charged interest for that period. This practice is strictly prohibited unless lenders make the terms more favorable to you, such as an extension in due date with a very small fees.
Last, but not the least, though payday loan laws in general vary significantly from one state to another, the laws regarding military payday loan debt remain the same in all states.