EasyFinance.com Blog

What You Need to Know About the California Payday Loans Law and Legislation

Posted July 27, 2019 by EasyFinance.com to Finance 1 0

Financial emergencies and unexpected expenditures can easily throw anyone off balance. If you don’t have a savings account, any savings whatsoever, or the amount you do have is insufficient to cover the incurred costs, you need a quick and easy way to raise cash. That quick and easy way is called a payday loan.

What Are Payday Loans?

It’s the kind of loan you can take over a short amount of time, where payment is due from your next paycheck. This means you will (ideally) only be in debt for a few weeks. These loans have various benefits that other types of credits do not have. They have fewer requirements, do not affect your credit score, and have a higher level of convenience.

If you’re based in California and considering getting a payday loan, it’s only right that you know what are the state laws and regulations regarding this kind of lending in advance.

Is It Legal In California?

According to California state law, payday lending is legal. The state imposes a limit of $300 on all payday loans offered. So, if there is a California payday loans direct lender who is offering you a greater sum than that, it’s most probably a scam.

The state law requires all lenders to be licensed by the Department of Business Oversight if they are to operate in California. This measure aims at protecting the rights of customers against fraudulent actions.

What’s more, all transactions between lenders and borrowers must be verified by a legal contract that includes information about the amount of the loan, interest rate, finance charges, and other terms.

Loan Amount in California

Fees and finance charges related to the payday loan should not be more than 15% for every $100 issued. If a California payday loans direct lender willingly agrees to prolong a payment, the law does not allow imposing an additional interest. APR (the cost of funds over the course of a loan on a yearly basis) should be 460%.

Important Consumer Information

  • Payday loans in the state are called “deferred deposit transactions.”
  • California law forbids criminal penalties to be imposed on customers who have failed to repay a loan.
  • If you return an unpaid check, there is a maximum additional fee of 15% for non-sufficient funds also known as NSF.
  • You can take one payday loan at a time, and you’re not allowed to take another one until the previous has been repaid in full. In California, rollovers are prohibited, and any and all extension charges are illegal.
  • California law strictly prohibits lenders from giving extra loans to customers who are still indebted to them.
  • It’s not allowed for borrowers to take a loan to repay a former one. Every loan has its procedure, and a new agreement is signed.
  • There are over 2119 payday lender storefronts in California, and that number is growing at a steady pace.

So, if you’re in a situation where you need a quick payday loan for an unexpected expense or other reasons, you should know what are the state regulations of California pertaining to payday loans, lenders, and borrowers. A good loan decision is made only after you know your rights.

About EasyFinance.com: ...

Leave a Reply:

Only registered users can post comments.

Find More Products & Services