Payday loans used to be very popular in the US, thanks to the fact that borrowers could quickly and easily get hold of the money, and could, in theory, simply pay it back once they got paid at the end of the month. However, as many people found out, borrowing payday loan money rarely worked out so smoothly, as the lenders would impose costly interest rates and even more hefty late fees and charges, which resulted in many people being forced to take out multiple loans in order to payoff the ones they’d taken out previously.
As of 2010, there were 19,700 payday loan companies operating in the US, around one thousand fewer than in the previous year, due to the steady decrease in popularity of payday loans throughout the country since 2006 (the year in which the number of payday loan companies peaked). The decline in popularity is probably due, in part, to the recession, but it is likely that the biggest factor has been the regulations on payday loans imposed by state governing bodies, in order to protect customers. Payday loan lending is now only permitted in thirty-two US states and many of these states have set strict limitations on the interest rates and fees that can be charged on the loans.
In the country currently, you can only borrow payday loans of amounts between $100 and $1000 and the loan lenders cannot press you for criminal charges if you fail to repay the full amount on time, although you can still be taken to court in order to settle the repayment plan. The average payday loan term in the US is two weeks, and the shorter the loan term, the higher its interest rates and charges tend to be, with APRs (annual percentage rates) typically at 400%, if not higher.
The industry has caused problems for many borrowers, as the loans are relatively easy to get hold of; all you’ll need is identification, an open, working bank account and some form of regular income or cash flow, and many outlets will be more than happy to lend you the money, with companies such as pawn shops, payday loan stores, check cashing stores, toll-free telephone lines and even rent-to-buy stores all having the ability to provide the loans in states where payday loans are legal.
In the state of Georgia, the Industrial Loan Act prohibits payday loans, but allows other small loans. However, small loans in Georgia face a small loan interest rate cap of 16% per year and sets out a criminal usury cap of 60% per year.
The regulatory body for small loans and payday loans in Georgia is the Georgia Office of the Commissioner of Insurance and the regulatory contact is Frank Ogletree, Director. If you want to get in touch or ask any questions about the laws for small loans in Georgia, write to the Industrial Loan Division, Two Martin Luther King, Jr. drive, West Tower, Suite 704, Atlanta, GA 30334, or alternatively you can call them up on (404) 656-2070.