Payday Loans

Washington Payday Loan Laws

Though payday lending is legal under Washington payday loan laws, there are certain basic requirements that lenders must fulfill in order to be eligible to issue these types of short-term cash advances in this state. Unlike other states, just having a check casher license is not enough; lenders must also a small loan endorsement to that license. There are certain other legal restrictions also that have been imposed on lenders. Following is a brief rundown on it.

Non-Payment Of Payday Debt Is Not A Criminal Offence

Criminal actions against payday loan borrowers are strictly prohibited if they are unable to pay off the loan because of certain financial difficulties. Lenders cannot file criminal lawsuits against those debtors.

Limit On Collection Charges

As per Washington payday loan laws, lenders cannot send the same check for collection more than once. Only one time NSF (non-sufficient fund) fee might be applicable and the charges must not exceed $25. However, they are allowed to charge certain other collection costs that may NOT include attorney’s fees.

Affordable Repayment Plan

There is good news for those borrowers who are facing difficulty in making the repayment on payday loans within the set due date. However, in order to be eligible to qualify for an affordable repayment plan (at no extra cost), debtors are required to notify the lenders in advance. The repayment plans include at least a 180-day time period where the loan amount is higher than $400. In cases, where the loan amount is less than $400, debtors must be allowed at least ninety days extra to pay off the loan. In either case, no further interest or other fees can be charged for the extended period of time.

Rollovers Not Permitted

It has been a very common practice for payday loan lenders that they often encourage borrowers to take another cash advance to pay off a previous outstanding loan. Washington payday loan laws strictly prohibit any such practices. Proceeds of another loan cannot be used to pay off a previous loan. As per the provisions of the state laws, there can be no rollovers, no renewals, no extension of due date (unless as part of a repayment plan), and no refinance of payday loans.

Maximum Number And Amount Of Loan

Though the laws do not say anything specifically about how many outstanding payday loans a person can have at one time, the aggregate total amount of the outstanding balance (from all loans) must not exceed $700 or thirty percent of the gross monthly income of the borrower, whichever is less.

Interest Rate And Other Charges

Washington payday loan laws allow lenders to charge interest in the following manner – 15% on the first $500 and 10% on loan amount above $500 (maximum can be $700). Besides that, an additional $15 can also be charged as other financial charges on every $100 of loan issued for a repayment period of fourteen days. This way, it is quite evident that payday loan is still a very expensive financial option in the state of Washington, as the APR (annual percentage rate) can be as high as 390% per annum.

Maximum Loan Term

Though there is no minimum limit on the repayment period on these types of short-term loan, the maximum period must not exceed forty-five days.

For any complaints against those payday lenders who you think are following the Washington payday loan laws, you can contact the Washington Department of Financial Institutions. They are accessible through fax number (360) 725-7827 and through phone number (360) 902-8700.


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One Response to “Washington Payday Loan Laws”

  1. scott says:

    Pay day lending is allowed in Washington but the lenders have to follow some conditions only then they can run their business in this state of Washington. If the borrower is not able to pay the debt, the lenders can not take any criminal action his/ her. Non payment of debt can not considered as a criminal offence. If the borrower is not in such financial condition to repay the loan, the lender has to suggest a repayment plan to him so that he/ she can do the payment in installments. Bounced checks can not be submitted again, only one time the charges can be taken for the non sufficient fund in the account, no further charges can be deducted. Pay day loans becomes horrible due to the renewal or roll-over, if you fails to repay a single payment , your loan will be rolled-over and then you have to pay very high interest again for the extended period of time but this is not allowed in the state of Washington. You can not take a new loan if you already have an outstanding loan with you. The lenders can not charge very high rate of interest they have to follow some specific guidelines for the maximum interest rate.

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