Payday loans are a fairly popular loan in the US, and attract many customers thanks to their promise of being able to borrow a small, manageable sum of money, for a short period of time until you next get paid. Unfortunately, they’re often more trouble than they’re worth, as the high interest rates and administration fees catch a lot of borrowers off-guard, and can cause people to spiral into a cycle of repeat payday loan borrowing, just to pay off their previous loans. It’s because of this that many US states have banned payday loans (only thirty-two states allow them) and many of the states that still permit them have set up regulations and limits to the charges and rates on the loans, in order to protect consumers and to limit the damage lenders can have on people’s finances. As such, payday loans in the US can only be given for amounts between $100 and $1000, and lenders cannot press criminal charges against borrowers if they’ve been unable to repay the loan by the end of the loan term.
However, despite this, in the states where payday loans are still legal, it’s far too easy for people to be granted the loans, as the lenders more often than not won’t carry out checks into the borrower’s credit rating or their ability to repay the loan, whereas banks do, both to protect themselves but also to protect the customer from charges they can’t afford. And it’s not hard to find a company that will give you the loan, either, with companies ranging from pawn shops, check cashing stores, rent-to-buy stores, toll-free phone numbers and of course, payday loan stores all possessing the ability to provide a loan (but only in the states where payday loans are legal).
Unfortunately, a lot of loan lenders don’t like the restrictions placed on the fees and rates they can charge, so they’ll often hide the true nature of their business, and in this way pose even more of a threat to borrowers. That’s why it’s so important to know the laws in your state before you decided to take out a payday loan.
In the state of New York, the Licensed Lender law prohibits payday loans, by making it illegal for check casher licensees to make loans, provide cash or to advance any amounts of money on postdated checks, unless that check is a payroll check. It still allows small loans to be lent out and borrowed, however. The interest rate charged on a small loan in New York state is that which is agreed to in the terms and conditions of the loan but cannot be more than 25% per year of the original loan amount.
The regulatory body for small loans and payday loans in the US state of New York is the New York State Banking Department and the person to contact about these loans currently is Regina A. Stone, Deputy Superintendent. Should you wish to find out more information or have any questions you’d like to ask, either call 1-877-BANK-NYS or alternatively, write to the department at One State Street, New York, NY 10004.