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Payday loans – a legal way to borrow money

Payday loan has a great number of other names – salary loan, payroll loan, emergency cash advance loan, small dollar loan and so forth. In general it is an unsecured loan issued for a short period of time. As it is a risky act for a lender the interest rate is higher than for a secured bank loan.

There are so many terrifying stories about people taking such loans and then unable to repay because of huge debt that many of us are simply afraid of non-bank organization offering cash loans. To be honest, sometimes such companies act like criminals – they approve loan applications, issue money and then start charging all kinds of hidden fees and commissions. Usually it is enough to go to the police – loan companies don’t want problems and in such cases they usually give up.

Payday loans are prohibited in some countries and allowed in the others. Somewhere such companies are kind of semi-legal. As for the USA we get a very curious situation here. Actually, the status of payday loans is different in different states. Let’s take a closer look at that.

Fast loans allowed

One can easily and legally take a short-term loan in 32 American states. It would be too long enlist all the states here, so let’s just assume that fast cash loans are available on more than 60% of the US territory.

Anyway, there are nuances and peculiarities in each and every state. We highly recommend you checking that for your location in particular. For instance, inhabitants of Washington are allowed to apply for instant loans, however the number of such loans is limited to eight payday loans per year.

Some states have restrictions for the amount of money borrowed, for interest rate and so on. So please be attentive and do not make snap decisions.

Payday loans are not allowed

It is impossible to get a short-term cash loan in eighteen American states including New Jersey, New York, Georgia and fifteen more. Such a decision is typically made by the local governments because of poor crime situations. There is always a risk that such loans would be used for money laundering or that local gangsters will rob fast loan offices.

Finally, state governments are worried about their citizens who may trust a fast loan company, borrow money and fail to repay due to high interest rate.

By the way, in some states of these 18 one can borrow money for short-term from non-bank organizations, however the interest rate should be below the set level. This level is different for every state and somewhere it is so low that loan companies have no commercial reason to operate there.

Payday loans status is unclear

Colorado, Maine and Oregon are three states where local governments are still discussing the maximum interest rate allowed. Right now loan companies are eligible to issue loans with much smaller interest rate than in the 32 states where cash advance is fully allowed. There are also disputes about the minimum period of a loan. Please check the most relevant information for your state prior to applying for a short-term loan.