Payday loans, whilst suffering from a decline in popularity in the US, are still fairly common and are used by many people to tide them over until their paycheck comes through. They’re fairly strictly regulated in the thirty-two states that they’re permitted in, but in general, loan amounts can be for any amount between $100 and $1000 and their typical APR (annual percentage rate) rates are 400% or higher. Even if they’re repaid on time the loans end up costing the borrower much more than other cash loans, due to the high interest rates and financial charges added onto the loan repayment.
It’s not difficult to take out a payday loan; all you need is an open, working bank account, some form of identification and regular income or a regular cash-flow of some kind, although checks to make sure the borrower can repay the amount on payday are rarely carried out and credit ratings are nearly never fully checked, which means that many people who would be turned down for a loan at the bank can find themselves in possession of one of these payday loans without much hassle. And it’s not hard to find an outlet that will lend the money either, with pawn shops, toll-free telephone numbers, rent-to-buy companies, check cashing stores and payday loan stores all lending out these loans.
In addition to the risks of the payday loans in themselves, there’s the danger that the payday loan lender is employing a strategy so as to hide the fact that they’re lending payday loans in order to avoid the regulations, limits and penalties on the loans. If the lender is deliberately trying to avoid regulations, it’s likely that they’re charging abnormally high interest rates and fees, and as such, they pose higher threats to a borrower’s financial security than the payday loan lenders who are operating openly. And, of course, any loan which is lent out over the internet poses the risks that can affect all online transactions.
Payday loans are currently illegal in the state of Pennsylvania. The state laws specifically prohibit check cashing licensees from giving out payday loans. Small loans are still available in Pennsylvania, but they are covered by the Consumer Discount Company Act, and the loans have annual interest rates capped at $9.50 per $100, with an additional service charge of $1.50 per $100 per year permitted.
The regulator for small loans in the state of Pennsylvania is the Pennsylvania Department of Banking and the regulatory contact regarding small loans is Jim Keiser, Administrator of Non-Depository Institutions. To get in touch with Jim, call (717) 214-8343 or alternatively you can write to the department at: Market Square Plaza, 17 N. Second Street, Harrisburg, PA 17101.