The Millstone Times January 2019
Answer: While there is no set definition of a payday loan, it is usu- ally a short-term, high cost loan, generally for $500 or less, that is typ- ically due on your next payday. Depending on your state law, payday loans may be available through storefront pay- day lenders or online.
Some common features of a payday loan:
- The loans are for small amounts, and many states set a limit on payday loan size. $500 is a common loan limit although limits range above and below this amount.
A payday loan is usually repaid in a single payment on the bor-
rower’s next payday, or when income is received from anoth-
er source such as a pension or Social Security. The due date is typically two to four weeks from the date the loan was made. The specific due date is set in the payday loan agreement.
- To repay the loan, you generally write a post-dated check for the full balance, including fees, or you provide the lender with autho- rization to electronically debit the funds from your bank, credit union, or prepaid card account. If you don’t repay the loan on or before the due date, the lender can cash the check or electronical- ly withdraw money from your account.
- Your ability to repay the loan while meeting your other financial obligations is generally not considered by a payday lender.
- The loan proceeds may be provided to you by cash or check, electronically deposited into your account, or loaded on a prepaid debit card. Other loan features can vary. For example, payday loans are often structured to be paid off in one lump-sum payment. Some state laws permit lenders to “rollover” or “renew” a loanwhen it becomes due so that the consumer pays only the fees due and the lender extends the due date of the loan. In some cases, payday loans may be structured so that they are repayable in installments over a longer period of time. Some states do not have payday lending because these loans are not permitted by the state’s law or because payday lenders have decided not do to business at the interest rate and fees permitted in those states. In states that do permit or regulate payday lending, you may be able to find more information from your state regulator or state attorney general .