In the US, it’s legal to provide payday loans in thirty-two states and many of the states permitting payday loans have set regulations and rules limiting the interest fees and charges added on to the loans, in order to protect consumers. Laws vary depending on the state in question, but throughout the country, payday loan amounts are limited to being between $100 and $1000, and lenders aren’t allowed to press criminal charges on borrowers who have failed to repay the loan by the end of the loan term. The loans can be taken out in a number of types of businesses, including: payday loan stores (which often also offer loans online), pawn shops, check cashing stores, toll-free telephone numbers and sometimes rent-to-buy stores.
This type of loan benefited from the popularity boom it saw in the first half of the 2000s, with 2006 seeing the largest numbers of lenders of payday loans, after which their popularity has been steadily declining. The decline in popularity is almost certainly linked to the recession, which hit in 2007 and saw regulatory bodies quickly moving to protect consumers rather than lenders, due to the poor financial situations many people found themselves in. And the crackdown by many states on payday loan lending rules has meant that many lenders are taking measures to hide the true nature of their business in order to avoid the laws, regulations and penalties covering the loans. This can make borrowing money through payday loans even more risky than before, as customers are now exposed to lenders who are playing outside of the rules and who are possibly charging far higher rates and fees than the lenders who are abiding by the law and openly providing the loans.
Given how misleading the rates and fees added onto payday loans can be, it’s strongly advised that you make sure you’re aware of how payday loan lenders can operate (if at all) in your state, and what limits and restrictions are in place to help protect you, the consumer.
In the state of Arkansas, the usury cap in the Arkansas Constitution currently prohibits payday loans. The loans used to also be prohibited by the Check Casher Act, but whilst the act was repealed in 2011, the lending of payday loans in Arkansas is still illegal. Small loans are permitted, however. A ballot in 2010 set the small loan interest rate cap at 17% per year, in order to limit the strain put on loan borrowers.
The regulatory body of small loans and payday loans in Arkansas is the Arkansas Attorney General. If you want to complain, get in touch or find out more about these types of loan, contact the Office of the Attorney General at 323 Center Street, Suite 200, Little Rock, Arkansas 72201 or alternatively you can reach the staff at the office by calling (501) 682-2007.