Many people nowadays experience a hard time in paying their monthly expenses such as electricity or water bills, groceries, or rent. Payday loans are one of the many options that people can choose from when they are struggling with their budgets. This kind of loan is short-term and has high interest rates. Though this is the case, the application period just takes several minutes to get approved.
The requirements needed are proof of identification, proof of income, and contact information. The payday lender will ask the borrower to sign a check or authorization letter. This check is dated for the next payday of the borrower. When the time for the loan payment comes, the lender will cash out the check to get their lent money back, together with the finance rate.
In South Carolina, the laws that govern the operation of payday loans are cited in the S.C. Code 34-39-110 et seq. According to their government’s laws, payday lending is legal and that all payday lenders must obtain a license before starting their operation. To obtain a payday lender license, an application fee of $1000 and an investigation fee of $500 are needed. Also, the state government requires a payday loan business owner to have a reputable character, good experience in payday lending, and a minimum net worth of $25,000.
As for the loan terms, the maximum amount of the money which can be borrowed is $550 which should paid within 31 days. The state, South Carolina, allows 15% of the borrowed amount as the maximum interest rate. For an instance, if an amount of $200 is borrowed, the borrower will pay a total of $230. That total amount already includes the interest rate. As for the 14-day $100 loan finance charge, the state authorizes $15. Then, the allowable APR or Annual Percentage Rate is 390%.
According to the laws of the South Carolina government, there is no specified maximum number of loans at a certain period of time. Also, the borrowers are not allowed to rollover. This means that if the period of 31 days is up, the borrower should be able to pay the full amount first before borrowing again. The state government is able to check if the borrower is eligible through a database.
This database contains all information about the borrowers in payday loans, whether they are already paid or not. However, if the borrower is not able to pay the loan within the 31-day period, entering an extended payment plan is advised. The extension of the payment plan allows the borrower to pay in four installments. The repayment or extended payment plan is made within a period of 12 months. In this case, the payday lender company is prohibited by the state to charge any additional fees or interests.
Just like many laws of the payday loans require, a signed agreement or contract must be provided by the payday lender for each transaction. This would have to include the names of the borrower and the lender, the amount borrowed, the interest rates, and any other terms or conditions of the loan.