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Want to Know More About Payday Loan Legislation?

Jun 10, 2008
Payday loan legislation has become stricter enforcing rules and legislations very strictly. Simultaneously, it provided a chance for payday loan companies to get their act together. A payday loan can be defined as a cash advance on your paycheck that should be paid biweekly. There are some conditions and clauses that make you qualified to apply for payday loan. The need for strict rules and legislations became the order of the day because of unscrupulous practices of payday loan lenders. Huge unregulated interest rates and mind-boggling late charges, check bounce charges, and processing fees made regulators step into the industry.

Some companies are listed among the leading stock exchanges of the world such as NASDAQ. Some states have taken very hard steps such as banning the entire lot of payday loan companies from the state. Also some companies have been charged exorbitantly for unfair practices. Companies in United Kingdom, Canada, and the United States of America have been charged for corrupt practices that would deter the financial freedom of the borrower thereby forcing him to pay huge amounts of money as charges.

A paycheck advance can be obtained in various other forms but with strict terms and conditions. People with bad credit can also opt for payday loan as it neglects to a certain extent about the credit history. People with bad credit history availing of payday loans have increased the popularity of the this form of loan.

The State of Washington has made new rules and regulations that give extended period of time for defaulters who are unable to make payments on the paycheck day. This payday loan legislation necessarily curtailed huge amounts of money which the borrower has to pay incase he defaulted.

After conducting rounds of talks with payday loan lenders, the North Carolina Department of Justice announced in March1 2006 that payday loan companies should exit from the state. After collecting the principle amount borrowed from their clients, payday loan companies exited from the state. They were not allowed to do business with the state anymore either directly or indirectly (from other states), making the payday loan legislations much tougher.

Payday lending is legal and regulated in almost thirty-seven states. It is banned and considered illegal business in thirteen states. It is illegal to do lending business in Georgia for the next hundred years, and unscrupulous practices have been monitored and the offering payday loans in Georgia is considered an offense equal to racketeering and risks one of a possible class action suit.

Different laws and payday loan legislations are formed and are strictly enforced to protect borrowers. If a payday loan exceeds in rotation for more than six weeks, it should be considered as a long-term loan and interest rates should be charged according to the banking norms. A borrower is entitled to make payday loans for a specified number of times.

Payday loan legislations also stipulate norms that are related to the recovery of payday loans. Threatening is not allowed while recovering payday loan. Generally, payday loan lenders opt for force while recovering payday loan.
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