PayDay loans in the United States are a bit of a unique commodity and tend to occupy a unique legal area. Here’s some information about the practice.
Payday Loans Overview
Payday loans are so named because they allow you to get money from an upcoming check early. Essentially, you can take out a loan for a short amount of time, from days to weeks, at a high percentage of paying it back, all without credit and without a lot of hassle. You will then pay it back with interest as soon as your next paycheck comes in.
The reason why these loans are popular is because sometimes you need the money right now, and not in a few days. If you’re running behind on a check for rent, for example, if you don’t get the check into your landlord by a certain day and time, the landlord isn’t going to necessarily care that you’ll have the money just a week later.
This is because you need it right now. That’s why people agree to the high interest in the loans since it gives them a flexibility that allows them to avoid calamities. The loans are still occasionally controversial, however, due to those high rates. These rates can be as high as three digits.
Legality and How They Work
These loans aren’t available in all states, and it will depend on the exact laws in your exact states to determine how they work. Some states have limits on interest rates, for example. In others, they may be banned entirely.
Some loans may be the kind that you can actually apply for online and get almost immediately. That would be the appeal of the loan. When you don’t have time to wait at all then you can do it this way, but it does pay to be careful and most people advocate avoiding them unless it’s an absolute emergency. It’s worth noting that you won’t go to jail for not paying back a payday loan. Debtors can’t be jailed for failing to pay back a debt in the United States, this is right in the U.S. Constitution. Instead, it comes down to being a civil matter between two parties, namely you and the company.
Overall, 27 states have these types of loans as being legal. Nine other states allow some kind of loan on a short term basis with heavy restrictions. The other 14, as well as DC, have made it illegal. There are also federal regulations that govern these loans. They are watched closely on a federal level.
Whether they will work for you will, of course, depend on your exact situation and how much you need money right now as opposed to in a few days. No matter what you do, it’s always wise to be as cautious as possible and to do your research. You can’t go wrong as long as you stick to these principles whenever possible.