Payday loans have seen a huge boost in popularity since the turn of the millennium, reaching their peak in 2006, and it’s no surprise, given their promise of short-term loans of small sums, repayable on your next payday. Legally, they can be for any amount between $100 and $1000, although the amounts vary by state, and are provided by check cashing stores, payday loan stores (often operating online), pawn shops and toll-free phone numbers. Rent-to-own companies also sometimes offer loans. Unfortunately, they often prove to be very costly, and can cause people to find themselves in dire financial situations as they’re much more expensive than other cash loans, due to the high interest rates and fees added on. That’s no real fault of the loan borrowers, either, as we’re all guilty of underestimating how much we need to put aside for emergencies, or how much we’ll be able to budget. But the payday loan lenders know that often, people will take out a second loan to repay the first, and so the cycle continues; this is why it’s important to know the facts and the situation regarding payday loans not just throughout the US, but also within your own state.
Payday loans are currently legal in Alaska, and the maximum loan amount is $500, with the minimum loan term standing at fourteen days. Once a loan is taken out, the maximum rate and loan fees are $5 plus either $15 per $100 of loan, or 15% with the lesser amount being the amount charged. So, for example, if you took out a loan of $100 for fourteen days, you would end up also paying a charge of $20 on the loan. The APR (annual percentage rate) for a fourteen day, $100 payday loan in the state of Alaska is 520%.
At present, the maximum number of outstanding payday loans you may have taken out at any given time is not specified in state of Alaska laws, but there is a limit of two renewals (also known as rollovers) on the loans. Repayment plans are available.
If you fail to pay the entirety of the loan and fees/interest, the state law has set out collection fee limits of $30 for non-sufficient funds charges, and court costs of no more than $700 more than the cost of the loan (+fees and interest) borrowed. Criminal action is not allowed to be taken out against the borrower, unless the payday loan check was returned due to the borrower’s account being closed.
Before taking out a payday loan, make sure you’ve carefully considered alternative options, such as smaller loans from your bank or other reputable sources, and be aware that payday loan borrowers are nearly twice as likely to be declared bankrupt than those who were turned down for the payday loans in the first place.
The regulatory body of payday loans in Alaska is the Alaska Division of Banking and Securities, and the regulatory contact is Patrice Walsh, Financial Institute Examiner. You can get in touch with the body by calling (888) 925-2521 or by writing to P.O. Box 110807, Juneau, AK, 99811.