People all over the United States sometimes avail of payday loans when they are in a bit of a financial bind. However, payday loans are not legal in all states, and in states where it is legal, like in Kansas, it is recommended to find out all information that you can about payday loans before applying for one.
Financial planners generally advise people to stay away from short term, high interest loans as they have the tendency to draw the borrower into what is called the “debt pit”. If applying for a payday loan cannot be avoided, please use this as a guide to know some basic information about payday loans.
A payday loan is a short term loan that comes with a very high interest rate. People normally use it when they need a small amount of cash immediately. The process of getting one is fairly simple. The borrower goes to the institution that provides such loans, which can be a payday loan store, check cashers or pawnshops. The borrower then issues a check to the lender for the amount of the loan needed plus the amount of interest. The lender then gets paid by cashing in the check issued by the borrower, on the borrowers next payday.
Loan Terms
The maximum loan amount for payday loans in Kansas is $500, regardless of the borrower’s gross monthly income, very much unlike other states wherein a loan ceiling is imposed based on a certain percentage of the borrowers gross monthly income. The rate is normally between 20% – 25%.
The loan term, or the length of time wherein a person needs to pay that loan off is between 7 – 30 days. The finance rate is at a maximum of 15% and no other fees are to be collected. Finance charges for a 14-day $10 loan is $15 whereas the APR or Annual Percentage Rate for the same type of loan is at 390%
Debt Limits
Borrowers in Kansas are allowed two outstanding loans at a time, regardless of whether the 2 loans can be from the same lender or from different lenders is not specified. Whether debt rollover, or the act of paying just the interest and have the principal loan amount rollover to the next pay period is allowed, is not clearly specified, as well as cooling off periods and whether repayment plans are allowed or not.
Although criminal actions against borrowers who fail to make payments on payday loans are prohibited, prospective borrowers should take into account that delays in payment or nonpayment of these loans have adverse effects on ones credit standing. An NSF or Non Sufficient Funds fee will also be charged, the amount will depend on the bank that issued the check.
How to Get Information or File Complaints
To know more about payday loans, pay a visit to or call the regulator, which is the Office of the State Bank Commissioner. They are located at 700 SW Jackson, Suite 300 Topeka KS 66603 and can be contacted via landline (785) 296-2266 and fax (785) 296-0168.