Pretty much everybody in the United States of America knows about payday loans nowadays. They’re easy to get hold of and can really help you out if you find yourself strapped for cash half-way through the month, and many of us will have considered getting one at one point or another. Whilst the limitations and regulations put on payday loans vary state-by-state, they can legally be for any amount between $100 and $1000, and they can be borrowed from operators such as check cashing stores, pawn shops, toll-free telephone numbers, some rent-to-buy companies and most often, from payday loan stores, which also often operate online. The average term of payday loans borrowed in the US is two weeks, and they typically have interest rates of 400% APR (annual percentage rate), or higher. To borrow $100, you’ll often be looking at finance and admin charges of about $15 to $30, but this can rise steeply for larger amounts or for the shortest loan terms.
In order to take out one of these loans, you don’t need much; you’ll usually just need to have a working, open bank account, identification and a regular source of income or cash flow. Credit checks usually aren’t carried out, and unlike banks, payday loan lenders more often than not don’t check the borrower’s ability to repay the loan by the end of the loan term.
Thirty-two US states currently permit payday loans to be borrowed, although many of these states set regulations and limits on the amounts that can be borrowed and the interest rates and fees that can be charged, in order to protect the consumer.
Payday loan borrowers, on average, take out between 8 and thirteen loans in any given year, with a single lender, often to pay off previous loans, late-fees and the costly charges that come with them. Because of this, a high percentage of borrowers of this type of loan have poor credit ratings and pay lots of bounced-check fines. This is what has led to the shocking statistic that payday loan borrowers are nearly twice as likely to be declared bankrupt than those who were turned down for the loan in the first place. So whilst they may have been more stable financially before they took the loan out than those who were turned down for it, they’re often in a worse financial situation afterwards.
The state of North Carolina has banned payday loans under the Consumer Finance Act. Small loans may still be taken out, although North Carolina law has also set a small loan rate cap of 36% APR (annual percentage rate) interest.
The regulatory body for small loans and other such finances in North Carolina is the North Carolina Attorney General. If you want to get in touch or find out more, call the North Carolina Attorney General’s office on (919) 716-6400 or alternatively, write to the office at 9001 Mail Service Center, Raleigh, NC 27699-9001.