Many people are unaware that there are certain states that do not allow payday loans. Some states even have restrictions on payday loan services, such as how many payday loans people can take out within a certain period and how much APR they are allowed to charge.
Most of these rules and regulations are put into effect to help people, not hurt them; however, what happens when you need a payday loan and don’t live in a state that authorizes them? Continue reading to learn what your alternatives are and if your state has restrictions on these types of loans.
Regardless of whether you take out a payday loan in person or online, you still can’t take the money obtained by your loan to states that deem them illegal. However, there are other payday loan alternatives in these states, such as a short-term personal loan, a title loan or an installment loan.
States that Do Not Legally Allow Payday Loans
- New Jersey
- New York
- North Carolina
Even Washington D.C., the nation’s capital prohibits payday lenders from opening businesses within its borders.
States that Have Laws in Place to Protect Borrowers
While New Hampshire, Ohio and Arizona do not blatantly prohibit payday check advance loans, they do have very strict laws, which keep businesses that do offer payday loan services closely monitored.
- Arizona – Arizona, for example, only allows lenders to rollover a loan a maximum of three times. This prevents borrowers from digging themselves even deeper into debt that they cannot escape.
- Ohio – Ohio only allows a person to take out a payday loan twice every three months. This prevents borrowers from taking out new payday loans to cover funds borrowed from previous payday loans.
- New Hampshire – New Hampshire only allows a borrower to take out one loan at a time, with absolutely no rollovers. In other words, the person must first pay back the money he/she borrowed before taking out another payday loan. These payday loans also have a strict APR of no more than 36 percent.
Ohio also restricts payday APR to 28 percent, which is considered extremely low compared to other states that do not have a restricted APR.
Many other states have state-specific laws that borrowers should read about, especially if they are considering taking out a payday loan online. This is important because many online lenders are stationed outside of the state’s in which they service, and they might not adhere to the laws put into effect in that particular state. If the payday lender fails to adhere to the laws put into effect by the borrower’s state, the borrower may be entitled to a payment reduction on any outstanding payday loans.
When you decide to take out a payday loan, you’ll want to make sure that you check out if your state has any restrictions put into effect. You’ll also want to make sure that you don’t break the law. Instead, ask a family member to borrow money or try one of the other payday loan alternatives such as a short-term personal loan, a title loan or an installment loan.