The once very popular payday loan industry is now facing a decline in its popularity and size, and has been since 2006, but as of 2010 there were still 19,700 payday loan lenders operating in the market, and they’re still making billions of dollars in profits off their loans. Whilst many states have taken the initiative to make payday loans illegal, thirty-two US states still allow them, and those that don’t allow them still allow small loans (with many placing strict limits and caps on the interest rates and financial fees and charges that can be added onto the loans). This is so that borrowers can be better protected and will hopefully limit the financial damage payday loan lenders can have on both individuals and the lending and borrowing market in general.
When people request loans from banks, there are numerous credit score checks and personal questions that the borrower has to pass before they’re offered a loan, whereas with payday loans, none of these checks are carried out and generally, all a person needs is an open, working bank account, personal identification and some form of regular cash flow or income. This means that many people can take out these costly payday loans without necessarily having the means to pay back the full amount, plus interest and charges once their paycheck comes through. Borrowers often get themselves into a vicious circle of borrowing multiple loans in order to pay off the last, and end up forking out thousands extra on the additional charges. As a result, we have the shocking statistic that payday loan borrowers are nearly twice as likely to be declared bankrupt than those who were deemed too financially unstable by the payday loan lenders to get a loan in the first place. This is why it’s vitally important that you know what the regulations and rules are in your state.
Currently, the state of Maine laws prohibit payday loans from being loaned and borrowed under Maine’s UCCC, with the exception of supervised lenders, who are permitted to provide the loans. The UCCC makes it illegal for check cashing licensees to cash or advance any sum of money on a postdated check, although as previously stated, supervised lenders are exempt from this. In Maine there exists a small loan rate cap of 30% a year for loans of up to $2000, or alternatively a fee can be charged on the loans of $5 for loans of up to $75, $15 for loans between $75.01 and $249.99, and $25 for loans of $250 or more.
The regulatory body for payday loans and small loans in Maine is the Maine Office of Consumer Credit Regulation, and the current person to contact about these loans is William N. Lund, Director. Should you wish to ask questions, complain or get help and advice, contact the Department of Professional and Financial Regulation, 35 State House Station, Augusta, ME 04333, or you can call them directly on (207) 624-8527.