Payday loans or cash advances are unsecured short term loans granted to consumers who have a steady stream of income and/or employment. Federal law provides for the broad strokes, but it allows local legislation i.e. state and municipalities to determine the details. Payday loans are outlawed and or curtailed (almost impossible requirements) by legislation in 13 states. The remaining 37 states are either safe havens or have reasonable state legislation.
Utah Payday Loans
Payday loans are legal in Utah, PROVIDED the borrower cashes a check with a lender. This is known as check cashing cash advance. Any other type is prohibited within the jurisdiction. Payday lenders get around this by operating in a safe haven state and advertising their services online.
Usury or usurious means the interests, charges, penalties, etc. are unreasonable. The key word is “unreasonable”. This is determined by the state NOT the federal government. Hence resort to state usury laws is a must.
Sky’s the Limit?
Simply put, interest is the legal term for amount earned from the principal and on forbearance. Usury is the term used when the same is considered illegal or exorbitant. If there are no usury laws, then it means that lenders can charge exorbitantly high rates. BUT some jurisdictions will still entertain a complaint if the interest charged is not only usurious but shockingly unconscionable.
Utah is considered a payday loan safe haven. This is because they have lenient laws relative to the same. This does not mean that the state favours lenders. Rather, it means the state grants each and every resident the right to make the choice. Below are a few key payday loan stats that a borrower should be aware of:
· There is no maximum loanable amount. Rather, the face value of the check determines the same.
· The maximum loan term must NOT exceed ten (10) weeks.
· The loan is renewable but the total loan term must not exceed ten (10) weeks. This is counted from the original date of loan, not the renewal date.
· Usury limits do not apply. Therefore, as a general rule, the borrower and lender can set up any amount and type of charge interests, penalties, etc.
· There is no finance charge limit.
· The law does not limit the maximum number of loans. The lender is given the discretion regarding the same.
· There is no cooling off period for the borrower
· Repayment plans are allowed. In fact the borrower can demand one provided it is done prior to the loan becoming due.
Where to Complain
The principal regulator is the state Department of Financial Institutions. There is a website; you only need to type in the appropriate “state” and the words “Department of Financial Institutions”. If you have no access to the internet, you can call (801) 538-8894. You can also refer the case to the state Attorney General’s Office.
For more information refer to the law proper, Utah Code Ann. 7-23-101 et seq. There is also the website of payday loans.org. Last but not the least, be absolutely sure you have no other option. And that the loaned amount will be used for a need not a want!