Payday Loans

Vermont Payday Loan Laws

As per Vermont payday loan laws, payday lending is not legal in this state. It is strictly prohibited for check cashers and other lenders to issue short-term cash advances to the consumers residing in the state of Vermont. It is important to note that the laws are applicable to all lending institutions regardless of whether they are located inside or outside the state.

Small Loan Act

Small loan act applies in this state, as per which lenders cannot charge an APR (annual percentage rate) of more than 18% per annum, especially if it is a small amount of loan issued for a short period of time. The relevant citation is Vt. Stat. Ann. tit. 9 § 41a. If any lender is charging you a higher rate of interest, you have the right to file a complaint against them with the state authority.

Where To File Complaints?

Those consumers who are trapped in the viscous cycle of payday debt issued by illegal lenders can file their complaint and get legal help from the Vermont Banking Division, which is the main authority in this state to regulate Vermont payday loan laws. You can contact them through fax at (802) 828-3306 and through phone at (802) 828-3307. Their address is Department of Banking, Insurance, Securities & Health Care Administration, 89 Main St Drawer 20 Montpelier VT 05620.

Are The Laws Applicable To Internet-Based Lenders?

Yes, the laws regarding payday loans or small loans are applicable even to those lending institutions that are operating their business from Internet. Just because a lending institution has not its office in the state of Vermont, it does not mean they do not need to follow the laws applicable in this state. As long as they are dealing with the consumers residing in Vermont, they must abide by the state laws.

Fair Debt Collection Practices Act Applies

Fair Debt Collection Practices Act (FDCPA) also applies in this state, which means you have the legal right not to be harassed by the lenders even if you are having difficulty in making the repayment.

Criminal Actions Are Prohibited

Vermont payday loan laws strictly prohibit lenders from filing criminal lawsuits against those debtors who are unable to repay the loan in time. It means even if you don not pay off the line within the set due date, you cannot be sent to jail. Non-payment of any debt because of poor financial position is not considered as a criminal offence in this state. However, anyone who borrows loans through some fraudulent activities, such as by providing false financial and personal information may have to face criminal lawsuits.

No Limitations On Other Basic Loan Terms

Though the state laws have restricted interest rate to only 18% per annum, there are no such restrictions on other basic loan terms, such as repayment period, maximum amount of loan, maximum number of outstanding loans at one time, and collection charges. All these things can be decided by the lenders and the borrowers through mutual agreement. Therefore, if you want to make the best use of the Vermont payday loan laws, you are strongly recommended to read the fine prints thoroughly before you sign it.

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One Response to “Vermont Payday Loan Laws”

  1. scott says:

    Pay day lenders can not charge very high interest in Vermont; they have to charge interest according to the small loan act. The annual percentage rate has to be with in some specified limit. The laws are equal for the companies which have their physical office in Vermont and for the companies which are present on Internet. The internet based companies are also liable to do the fair business with the residents of Vermont. If the borrower is not able to do the repayment, the lenders can not take any criminal action against them. Fair Debt Collection Practices Act also applies in Vermont. According to this act, the lenders can not harass you if you are not able to do the repayment. The state authorities have taken some serious steps to control the bad effects of pay day loans but still a lot of work is left to do, there are two no specific rules present for the maximum number of outstanding loans, declaration of repayment period etc. It is important to note that the laws are applicable to all lending institutions regardless of whether they are located inside or outside the state.

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