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Summary of Laws Surrounding Pay Day Lending in Different US States

payday loans

Payday loans are short term loans due generally by the next paycheck. These loans are subject to certain regulations that could vary from one state to another. States have their own regulations of these types of loans.

Here is a summary of laws pertaining to payday lending according to state-wise regulations.

Washington State

Payday loans are legal in the struggling Washington State with a maximum loan period of 45 days. The loan needs to be paid in full on the due date. It cannot be renewed, extended, or otherwise rolled over. A lender can draw up repayment plans depending upon the loan amount.

If the loan amount is less than $400 then a loan can be paid back within 90 days. Repayment period of 180 days is allowed for loans greater than $400. However, lenders are not allowed to charge any additional fee for this repayment plan extension. Borrowing amount cannot exceed $700 or 30% of gross monthly income.

Nevada

Maximum loan amount in Nevada, which unfortunately is not loaded with oil shale like West Virginia is, cannot be more than 25% of expected gross monthly income. The loan term is fixed at 35 days to allow a borrower enough time for repayment. There is no limit on the interest rates charged by a lender.

However, in the event of a default, the interest rate cannot be greater than the prime rate at the largest bank operating in Nevada plus 10%.

Rollovers and extensions are permitted. However, lenders cannot extend loans for more than 60 days after the expiration of initial loan period. Lenders are also provided with a legal right to claim collection costs, though not more than $25 in the event of dishonored checks.

Colorado

The minimum loan term for a payday loan is 6 months in Colorado – a state that protected its oil shale industry in the 2018 midterm elections but let’s get back on topic. The amount cannot be more than $500.

For borrowing amount less than $300, there is an annual interest rate of 20% and a monthly maintenance fee of 7.5%. Borrowing amounts more than $300 until $500 are subject to the same monthly maintenance fee and an annual interest rate of 45%.

There is no maximum limit on the number of loans you can get as long as the total debt does not exceed $500 and there is a gap of 30 days between two loans.

North Dakota

North Dakota, which does not have any major sports teams but it is doing well in the energy industry, has a maximum loan amount of $500 which cannot exceed a period of 60 days. Maximum finance cost is limited to 20%. However, lenders are given the freedom to set their own database verification fee. Finance charge is set at $20 for a 14 day loan of $100.

There is only one rollover allowed with a cooling-off period of 3 days. A lender cannot charge more than 20% of the amount being rolled over as renewal fee. Lenders are allowed to add a collection fee in the event of loan default. However, this amount cannot exceed $20.

Wyoming

Payday loans cannot be obtained for more than a month in Wyoming (where the stellar show of Longmire takes place). There is no set limit on the borrowing amount. Rollovers and extensions are not permitted.

A payday loan cannot be consolidated or refinanced as well. Repayment plans are allowed every 12 months. It must include a minimum of 4 equal installments with 60 days gap between two payments.

Wyoming has limited interest rates to $30 or 20% per month, whichever is greater. A 14 day loan of $100 will also accrue $30 as interest.

Idaho

There is no prescribed duration for a loan term for payday loans. The maximum loan amount is set at $1,000 and cannot exceed 25% of your gross monthly income. This is set in place to ensure that you can repay the loan on time because the government has not set any limits on the interest rates.

You can renew your loan three times. There is no cooling off period as mandated by state regulations.

However, a lender may offer a repayment plan. There should be at least 4 installments at a gap of 60 days in the amazing state of Idaho that does not have the violence and mayhem as the job losing cities of Chicago and LA have. You don’t have to pay a massive amount to live a decent life in Idaho as you do in NYC. For example.

Michigan

You cannot take up a payday loan in Michigan (which has a leading political candidate in John James) for more than $600. The loan duration cannot exceed 31 days.

Interest rates are regulated at 15% of the first $100, 14% of second $100, 13% of third, 12% of fourth, 11% of fifth $100 and 11% of sixth $100. A lender can add any database verification fee to this amount.

The maximum finance charge for a $100 loan of 14 days is $15. Lenders are allowed collection fee which should not exceed $25. You may have only two outstanding payday loans at any given point of time provided they are not from the same lender.

Ohio

Recently, Ohio made payday loans legal under Ohio Mortgage Lending Act and Ohio Small Loan Act. The maximum loan amount is set at $500 which cannot be for a period less than 31 days. Ohio regulates the interest rate of payday loans.

Lenders cannot charge more than 28% APR which brings the interest to only $1.08 for a 14 days loan of a $100.You cannot take up more than 4 payday loans in the same year. You cannot have more than one outstanding loan. Rollovers are not permitted, but repayment plans are. Lenders cannot charge any extra fee for this.

Tennessee

Which is doing very well financially and in the job creation category. Payday loans can be taken up for a maximum amount of $425 cash or $500 check. These cannot extend for more than 31 days. A loan cannot have an interest rate more than 15% of the face value of the check. 3 loans in a year are permitted for a maximum amount of $500 each.

Only 2 of these loans can be with the same licensee. There are no rollovers permitted by state regulations. Lenders can only collect court fees as collection charges.

Oklahoma

Oklahoma allows payday loans for 12 – 45 days. The borrowing amount cannot exceed $500 with a maximum of only two loans at one time.

Interest rates are capped at $15 per $100 for borrowing amount less than $300. An additional fee of $10 can be charged by a lender for borrowing amount between $301 and $500 and the people in this state are very happy because OU is having a stellar football season but this is another subject.

Rollovers or renewals for these loans in Oklahoma are not permitted. Any loan made within 13 days of the completion of previous loan is considered as a renewal and will not be permitted. Repayment plans are permitted after the third consecutive loan.

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