Payday Loans

What Is A Pay Day Loan? Is It Legal In Your State?

A pay day loan is a short-term lending program that allows you to borrow a small amount of money very quickly and easily, but it requires you to pay it back in full on the next pay day. That is the reason why this type of loan is often advertised as an easy lending option for salaried individuals who get a fixed amount of salary every month on a certain date. But, in the last few years, many new payday loan companies have entered the market and the trend has changed now. Now, almost anyone who has a regular source of income can qualify for these loans. As far as the legal status of payday loans are concerned, the laws vary from one state to another. Many states have banned it while other states allow payday lenders to run their businesses provided they meet some specific legal criteria. Following is a brief rundown on some of the most crucial things that you must know about payday loan.

Popularity And Legal Status

If you are considering borrowing a pay day loan for the first time, you might be wondering why there is so much debate about these loans despite the fact that they are already very popular with the majority of people residing in the United States of America. Your concern can be much greater when you get to know that it is illegal for payday lenders (including those who operate their businesses through Internet) to run such lending businesses in over sixteen states that include West Virginia, Pennsylvania, Vermont, North Carolina, Maryland, Oregon, Massachusetts, Connecticut, Arizona, Maine, New Hampshire, Ohio, Arkansas, New Jersey, New York and Georgia.

There are several reasons why pay day loans are still popular. For example, it is very easy to qualify for these loans. The application process is very simple, which does not require you to go through complex paperwork. The best thing is that the approval comes very quickly. People who are in urgent need of money to meet some temporary financial emergencies often get caught in the trap because of these lucrative features.

Yes, payday loans are a trap because there is a scary side of the story also. Payday lenders charge very high interest rates while various other types of fee are charged additionally. The overall cost of a pay day loan is so high that the majority of the borrowers fail to pay it back in time. Failure to make timely repayment makes the story more horrible,

as the cost simply keeps on multiplying so fast that the overall outstanding debt balance soon becomes double or triple or even more of the initial principal amount. Collection call harassment is an additional horror to this story.

Why These Loans Are Still Legal In Many States?

Many states, where pay day loans are still legal, have enacted certain laws to make things more favorable for the borrowers. But, you can take advantage of those laws only when you are aware of the same. Legal awareness is the key word when it comes to making a decision about borrowing a pay day loan.

Overall, you can say that pay day loan programs are popular because they are easy and quick to borrow (and so look like an instant solution to immediate financial problems) and these programs are being banned in various states because these loans are extremely costly and they create a vicious debt trap for borrowers.

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