Payday loans are now common in the lending and borrowing sector of the financial market in the US, and it’s not hard to see why; at first glance they provide a small, easily managed sum of money for a short period of time of your choosing, which you can repay once you’ve got your next paycheck. But unfortunately, the situation often works itself out a little differently and not nearly as well as the borrower had been hoping. As such, many people find themselves needing to take out second and third loans to pay off the previous ones, in an attempt to avoid late fees and non-sufficient funds charges, but in doing so, they put themselves in a situation where they have to repay hundreds, if not thousands, more dollars than the original amounts of the loans. The situation is not helped by the fact that these loans are often the only loans some people can be approved for, as banks and building societies will always perform a number of checks into a borrower’s financial situation before they’ll agree to lend money, whilst payday loan lenders don’t have to perform any checks on credit scores and they usually won’t question the customer over whether or not they have the means to repay the loan once its term is up.
It’s very easy to find payday loan lenders as check cashing stores, pawn shops, toll-free telephone numbers, rent-to-buy stores and payday loan stores (often found operating online) can all provide payday loans.
The laws regulating payday loans vary depending on which state you’re in and some are stricter than others, but for the time being, payday loan lending is legal in thirty-two of the US states. More than half of the states permitting payday loans have created limits on the amounts that can be lent and the interest rates charged on the loans. The laws also tend to prevent criminal action being taken against the borrowers, although borrowers who don’t pay their loans back by the date can still be taken to court in order to sort out a way to return the money to the lender. Given how freely payday loans are loaned out, and how devastating they can be to the consumers, it’s important to read up about the laws regulating the loans in your state.
The state of Vermont currently prohibits payday loans under the Small Loan Act. Small loans are still legal, although the small loan rate cap in Vermont limits the interest rate on small loans to a maximum of 18% per year.
The Vermont regulatory body that handles queries and makes decisions regarding payday loans and other small loans is the Vermont Banking Division, of the Department of Banking, Insurance, Securities & Health Care Administration. The regulatory contact is Sue S. Clark, the Regulatory and Consumer Affairs Chief. Should you want to get in touch with Sue Clark, write to her at 89 Main Street, Drawer 20, Montpelier, VT 05620 or alternatively, you can call up on (802) 828-3307.