Payday loans are fairly popular now, thanks to the fact that they offer small, short-term loans which you just pay back once you get your paycheck. It’s an attractive offer, and a lot of people end up borrowing through one of these loans because, on the face of it, it seems easy to just pay off the loan. The rules and limits surrounding the loans are different, depending on which state you’re in, but in general, with a payday loan you can borrow any amount between $100 and $1000, with the average loan term lasting fourteen days until it’s repaid. Generally speaking, the shorter the loan term is, the most costly it is, as higher interest rates tend to be placed on them.
You can take out a payday loan in many places, including check cashing stores, pawn shops, payday loan stores (which often operate online), toll-free telephone numbers and sometimes from rent-to-buy companies. Credit ratings aren’t usually checked when people take out payday loans, and the companies lending the money often don’t question the borrower about whether they’ll actually be able to repay the loan, so it’s fairly easy for people to be allowed to borrow the money when if they’d asked the bank for a loan, they wouldn’t have been granted it. This is the main reason why so many people end up repeat borrowing, often from the same companies, in order to pay off the previous loans they’ve taken out.
Because of the growing damage payday loan companies and lenders have been doing to the already dire financial situations that many find themselves in, a number of US states have created laws that aim to prevent damage to borrowers and to stop them from taking out too many loans in the first place. With the catches and high interest rates and fees placed on payday loans by the lenders, it’s vital that you make sure you know your rights regarding payday loans in your state, so that you don’t find yourself borrowing from a company that’s illegally lending these loans and to ensure that you know what you can do and who you can contact should you find yourself needing help.
In the state of New Jersey, payday loans are currently illegal. The Consumer loan act prohibits check cashers (and others of this ilk) from cashing or advancing money on a postdated check. However, small loans are permitted and the rates and fees for these are determined by the contract. New Jersey law sets a rate cap on small loans to 30% APR (annual percentage rate).
The regulatory body of small loans in New Jersey is the New Jersey Department of Banking and Insurance and the current point of contact is Ludi Hughes, Assistant Commissioner. To get in touch or find out more, call up on (609) 292-5360, or write to 20 West State St., Trenton, NJ 08625.