In any state across the United States, the popularity and volume of payday loans has multiplied by manifold. Salaried people who face financial difficulties during the mid or end of the month turn to borrowing when they face unusual money requirement in the form of unexpected expenditures or utility bills etc. The entire loan application process is very simple and can be completed online itself. Once the lender is satisfied with the applicant’s profile by comparing against standard qualification criteria, the loan is sanctioned and money is transferred in the bank account of the applicant.
Various attributes that have contributed in the popularity include minimal processing time, absence of any security in the deal and no restriction on the money utilization. The entire deal is expected to end by the next pay date which makes a standard loan last no more than 2 or 3 weeks. The entire money along with the necessary interest and fee amount is required to be repaid by the end of month and the loan contract gets over.
Payday Loans has been classified as a legal lending product. The legislation has fenced the scope of payday lending in the state keeping in mind the various hardships and issues faced by most of the people. The idea behind such reduced scope is to keep the customer’s survival on the forefront and making sure that any borrower who does not plan his finances very well end up in a big soup. These regulations indirectly are controlling the behavior of an average borrower and are in place with the intention of stopping people to behave irresponsibility and get into erratic borrowing.
The prominent provisions surrounding this legislation are as follows.
Payday Loans has been classified as a legal lending product
- The maximum amount of loan which a payday lender can furnish to a borrower at one point of time is $500.
- The minimum loan term for which the loan is sanctioned is 7 days and it goes to a maximum of 30 days. One cannot borrow money on a single loan account for more than 1 month in one go.
- The maximum finance rate has been capped at 36% annually. This is a major boon for the borrowers since the interest outflow is limited and no means of any exploit can occur.
- The above point converts into $1.38 finance charge for a 14 day payday loan of $100. Thus setting up a maximum APR of 36% is truly in the interest of the borrowers.
- To control any irresponsible borrowing, not more than one loan can stand outstanding in the name of the customer. A borrower cannot refinance, rollover, renew or extend the loan in any situation. The idea is to close the previous loan in full and final and taking up the next loan after that.
- A cooling off period of 60 days is required to be maintained by the borrowers. This again promotes responsible borrowing.
- Any lender cannot initiate criminal proceedings against a borrower who is not able to clear his payments.
- Either of the party can approach the New Hampshire State Banking Department in case of any complaints of additional information.
Any individual who is in a dire need of money should not just blindly follow the payday loans online route. Sufficient effort must be made and other alternatives should be considered during such circumstances. The applicant can initially try his luck by approaching the various relatives or friends if they can give some advance. It has its advantage in the form of relaxed repayment terms and is less stressful as well. Similarly, one can approach their regular bankers too or not for profit credit unions requesting them for a quicker processing time.
The idea of borrowing is inevitable in various situations. It is important to dose the financial crisis through a quick injection of funds by the way of loans, but a good amount of brains should be put to work out the repayment strategy. All things should be taken into consideration like future cash inflows, outflows, expenditures etc. must be worked upon which will help the applicant to do money management in a more effective way.