Payday advances are a type of loan awarded against the borrower’s postdated personal check or next paycheck as collateral. This kind of loan is designed to resolve temporary cash flow problems, or deal with mid – month financial crises.
They are also a preferred option for people who cannot get loans from traditional lending institutions, which typically have very stringent requirements during the loan application process. However, payday advances are subject to very steep interest rates and short repayment periods.
Payday advances in Los Angeles are regulated by California state law. To legally operate in the area, Los Angeles payday advance lenders must be licensed and registered with the California Department of Business Oversight ( DBO.) A list of properly licensed lenders in available on their website.
Payday Advance Los Angeles Online
Payday loans in Los Angeles are capped at 300 dollars. Further, the maximum fee a lender can charge on each loan is limited to 15 percent of the total loan advanced. For example, if one wants a 300 dollar loan, the maximum fee applicable will be 45 dollars. This means a borrower will receive only 255 dollars on a 300 dollar loan request.
In Los Angeles, the annual percentage rate (APR) on payday loans comes to about 400 percent. Lenders are required to disclose the APR they levy prior to any transaction.
The maximum loan length for such a loan is a maximum of 31 days. However, a borrower can receive an extension for repayment of the loan without paying any additional fees.
Other statutory regulations include:
- A borrower who has an outstanding payday advance cannot receive another loan
- Lenders cannot require a borrower to purchase any other product as part of the loan application process
- Lenders cannot accept any collateral on a loan
Lenders are also prohibited from taking any unlawful, predatory or intimidating action during the course of the loan and repayment period. The DBO has also provided a means for borrowers to file complaints against lenders on their website.
One can apply for a payday loan in Los Angeles either through the Internet or at a lender’s physical location. Once an application is approved, the borrower writes a personal check for the desired amount. The lender then gives out the cash, less the stipulated fees.
Potential borrowers must also provide lenders with a number of documents during the application process:
- It is not required that one be employed, but one must be able to provide proof of continuous income for the last 90 days
- Proof of US citizenship
- Proof of residence in the state the loan is applied from
- Valid Social Security Number or Individual Taxpayer Identification Number
- A verified home or work phone number and address
- Proof of an active and current checking account
- A verified email address
Legislators are currently looking at ways to enact more strict regulations on payday lending. This is to prevent situations where borrowers fall into a cycle of perpetual debt, as well as curb predatory methods of debt collection should one default.
Borrowers are advised to deal with properly registered payday lenders. When one does business with unlicensed lenders, whether operating online or in storefronts, they are less likely to benefit from the protections provided to borrowers by state law.
Those protections include limits on the dollar amount of payday loans and the fees consumers can be charged, as well as requirements that lenders provide borrowers important information about loans. Vigilance in this regard is necessary to avoid falling into perpetual debt.