Payday Loans

Payday Advance

Payday Advance

You usually call it a paycheck advance or payday loan. What is it? It is a short-term loan that covers expenses until your next payday. Sometimes this is called cash advances, though that the term can also be referred as cash provided against a pre-arrange line of credit like plastic money (e.g. credit card). Some even offer payday loans online.

In the United States, Payday lending or payday loan is legal and regulated in 37 states though many states have usury laws which do not allow interest rates more than the excess of a certain APR (Annual Percentage Rate). The federal banking regulation bodies became aware of the lender/servicer model or the rent-a-bank model or the rate exportation, they started to forbid partnerships between the lenders that offer payday loans and the commercial banks. In effect, they have discouraged long-term debt cycles.

In some states, the borrowers have a certain number of loans they can borrow, namely Florida, Michigan, Illinois, Indiana, North Dakota, New Mexico, Oklahoma, South Carolina, and Virginia. In Virginia itself, a fixed term of renewing the loan is administered, thus, the lender shall offer a lower interest rate or loan but with a longer period/term. By this, the borrower can finish the debt cycle. In Oklahoma on the other hand, for example, their law allows having more than one loan outstanding especially if it’s a payday loan.

As an alternative, different options are offered to borrowers rather than getting the payday loans. Pawnbrokers, credit payment plans, overdraft protection from the banks, credit union bodies that offer lower interest and more stable terms, emergency cash funds from the community and of course, borrowing money from your family members or friends, to name afew.

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