Payday loans are loans of relatively small amounts, which are generally taken out for a period of less than a month, until the borrower receives their paycheck and can repay the amount. The payday loan industry boomed in the 2000s, reaching its peak in popularity in 2006, but is now seeing a slight decline in its profits and the numbers of lenders operating in the market. The loans are typically for amounts ranging between $100 and $1000, and the average term for a payday loan in the US is two weeks.
It’s fairly easy to find a lender, with pawn shops, toll-free telephone lines, check cashing stores, and payday loan stores (which often sell their loans online) and sometimes even rent-to-buy stores all offering the loans, and they don’t question the borrower about whether or not they’ll actually be able to afford to pay back the debt at the end of the borrowing term. As such, the money is loaned out to people who don’t necessarily have the funds to pay the loan off when their paycheck comes in, and so they end up borrowing another loan in order to pay off the first. This creates a cycle in which the borrower keeps having to take out more loans in order to pay off previous ones, and is the reason that payday loan borrowers are almost twice as likely to claim bankruptcy than those who were turned down for the loans in the first place (due to being too financially unstable). This is a shocking statistic, which quite clearly shows how payday loans have the ability to cause the borrower’s financial situation to worsen to quite a serious state. It’s because of all of the risks that come with these loans that people are advised to find out what the laws and regulations are in their state.
The Small Loan Act in the State of West Virginia prevents payday loans from being lent or borrowed, but small loans of different sorts are still permitted. This law also sets a limit of 31% on the annual interest rate that can be applied to small loans provided in West Virginia, and the small loans that fall under this regulation are for amounts of $2000 or less.
The regulatory body for small loans and payday loans in West Virginia is the Office of West Virginia Attorney General (the Consumer Protection Division also deals with laws and regulations to do with small loans). Should you want to get in touch, complain or find out more details about the small loan laws in West Virginia, contact the Consumer Protection Division at 812 Quarrier Street, 4th floor, Charleston, WV 25301, or alternatively you can talk to somebody by calling (800) 368-8808.