New Payday Loan Rules You Should Know About Before Requesting
Payday loans are a great opportunity to get a little financial support when money is needed very quickly. They are becoming more and more popular among Americans who are unable to pay their bills in time.
Some bills can be added as extras to your regular monthly bills and pay them all on time becomes very difficult for many. In such situations short-term cash loans that can be received in one day, such are payday loans become very relevant.
However, the terms and conditions of payday loans are scaring away many borrowers, and many who needed them did not risk deal with this type of loan. Now the conditions have improved, because some payday loan rules changed in 2018 thanks to CFPB (Consumer Finance Protection Bureau), so now you have a bit more options. You can distinguish the right lenders from the predators who only hunt for your money.
If you need a loan of up to $ 500
If you need a small loan of up to $ 500, then the lender will not have to check your financial condition as deeply as this is done with large loans. Now, under the new CFPB rules, you will be able to request another payday loan when you have repaid at least one third of the previous loan.
Prevention of fines
US citizens pay more than $ 500, borrowing less than $ 400 when they use payday loans. Lenders involved in such loans want to be able to automatically withdraw payments from the debtor’s account, so it is often one of the requirements for the borrowers to provide them with full information about their bank account and consent to an automatic withdraw.
If the borrower does not have enough funds in the account, then an unsuccessful withdrawal of payment causes huge commissions, which significantly increase the debt. This extra money, along with already very high interest rates, can multiply the original amount of debt several times.
Under the new payday loan rules, lenders will be required to notify borrowers in writing at least three days in advance that they will write off the amount due to them and in what way this will happen. In addition, after two unsuccessful withdrawal attempts, lenders will have to re-authorize the payment method with the borrower. This will help to reduce the overpayment because of the high commission for unsuccessful withdrawals, because the borrower will be warned.
Financial Review
Payday loan rules require lenders to check the financial situation of the borrower before issuing a payday loan. This means that if the interest rate does not fall below 36%, then the lender will have to receive the credit report of the particular borrower.
The borrower must have enough money from his income, after all living expenses, payment of his bills and all financial obligations, to be able to pay the required amount of payday loan.
Payday Alternative Loans
Now the payday loan has alternative options. CFPB has announced the introduction of new long-term payday loans. One of the alternatives offers borrowers the opportunity to repay a loan for up to two years in equal installments. The conditions of the loan should be such that the borrower does not overpay more than 36% of the original loan amount.
Another alternative option payday loan is a loan with a restriction of application feeds of $ 20 and a limited interest rate of 28%. Such restrictions and alternatives make the payday loan a more attractive type of credit than they were before with unlimited rates, which sometimes could take off to the skies.
Restriction of re-borrowing
Often just one payday loan that starts with a small amount delays a person who was already in a difficult financial situation. First, a person does not have enough money to pay off his obligations and he takes a payday loan to pay his bills, and the next month he does not have enough money to pay off in addition to all his obligations also and that payday loan. Then he is forced to take another loan, and so it continues from month to month.
About 80% of borrowers who have taken a payday loan fall into this endless cycle of debts, from which it is very difficult to break free. New payday loan rules have prohibit to lenders within one month to issue a loan to the same borrower after payout a previous short-term cash loan.
In addition, if the borrower has already paid at least one-third of the full amount of the loan, but is unable to repay the entire payday loan in a timely manner, then he now has the right to demand up to two extensions of the repayment term.
Ask for payday loans from a reliable company
Periodically it happens that people can’t cope with all their bills, so you have to apply for emergency financial support to stay afloat. In order not to be in permanent debt, CFPB has developed these new rules.
Now consumers have received more protection from unscrupulous and predatory lenders who drive borrowers into endless debts. You have already learned about the new opportunities that you have and can distinguish a good lender from others with whom it is better not to deal.
We invite you to use the loan application form located on our website to receive loan offers from various lenders from our extensive partner base in response to your request. We cooperate with proven companies.
In addition, you can contact our loan officers for advice just by writing to us or leaving your comment below. We will contact you shortly and help you understand all the intricacies of various payday loan offers, as well as help determine the right choice of loan.
You can also learn a lot of useful information regarding credit, loans and personal finances from our financial blog.
