States where payday loans are illegal

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In a country where more than 40% of the population is struggling to pay off their debts, using a payday loan may seem like a smart idea. These loans seem to be a viable alternative to struggling with a high-interest credit card bill. But, the truth is no one should be taking a payday loan, and there are many states where you can’t legally purchase a payday loan.

In the United States, the Consumer Financial Protection Bureau has prohibited payday loans and ​other short-term, high-interest loans as a form of unfair debt collection. These loans are commonly referred to as “payday loans” because they are often available to be borrowed for a one-week period, with the total amount repaid at the end of that week.

How many states are payday loans illegal?

Payday loans are typically fairly inexpensive loans from which you pay back cash as quickly as possible. Yet despite this, payday loans are illegal in a wide range of states. Due to the high-risk nature of these loans, many states have chosen to ban them outright, making it a crime to have a payday loan in their state.

Payday loans are illegal in the following states:

Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia, and the District of Columbia

Which States Have Payday Loan Caps?

Payday loan caps are laws in some states that cap the amount of money that payday loan companies can charge you for obtaining a payday loan.

They are not regulated by the Federal government. Almost all states prohibit payday lenders from charging fees for loans of longer than $50, except in states where the law has been amended to allow higher fees.

In a few states, a payday loan is legal, albeit with a few limitations.

The laws vary from state to state, but generally, loan companies offering emergency cash loans (also known as payday loans and cash advances) can be shut down and fined heavily if they operate in states where such practices are illegal.

First, a payday loan must be less than $624. Second, the loan must be paid off within 30 days of the money coming in.

How can I tell if a payday lender is legally licensed in my state?

Payday lenders, or “payday loan” outlets, have been a source of debate in the last decade. In 2013, the Consumer Financial Protection Bureau finalized a rule that would have required lenders to verify your income and state your annual income to make a loan. This rule was recently repealed in favor of a new rule that will provide consumer protections, but payday lenders still pose a significant risk to consumers.

To determine if a payday lender is licensed in your state, search for the organization in your state’s business database. If you find any complaints against the company, contact your consumer protection agency and let them know. If the agency cannot verify the license, contact your state’s department of financial institutions.

If payday loans are prohibited in your state, but you see a loan advertised, it could be a scam.

Payday loans are allowed in most states, but if you live in one of the more than 14 states that restrict or ban the use of payday loans, you may not have seen them advertised on television. But, if you are on the internet, on a popular social media site, and you keep seeing the adverts, it may be a scam.

A lot of lenders advertise them under different names. It would help if you were careful to ask about the interest, fees, and penalties before signing any paperwork.

Can an illegal payday loan sue you?

Yes, payday lenders can indeed sue you in civil court for any reason. If they find out that you’re in default (by not making payments on your loan), they can file suit against you if you’re rendering if you can stop automatic payments on a payday loan. The answer is a resounding yes. The fee delinquent, they can sue you for all the money you owe them. It’s also widely agreed that the lender has no right to go after you in criminal court since it’s illegal to loan money at “exorbitant” interest rates.

How can I avoid paying payday loans legally?

You may have just taken out a payday loan to get by during a hard time, but maybe you’re paying for a payday loan is a loan fee, not a loan payment. When the loan is paid in full, you can revoke the ACH authorization that gives a payday lender permission to electronically take money out of your bank account or credit union.