Payday Loan Regulations Help Protect Borrowers from Excessive Fees

One of the fastest growing industries in the United States is the payday loan industry. Thanks to the economic recession and tighter lending rules, payday loan companies have carved out a niche and are able to lend money to people when they need quick cash.

Lending Regulations

As the payday loan industry continues to grow just about every state in the nation has their own lending regulations to insure that the citizens of their states don’t lose a lot of money on payday loans.

Many states have set a maximum amount between $250.00 and $1,000 that they allow their citizens to borrow from a payday loan company plus extensive finance charge regulations are being adopted state wide.

For example: states like Illinois and Kentucky have set rules that payday loan companies can’t charge a finance charge of more than $15.00 per $100.00 that a customer may advance.

Payday Loans to the Military

One regulation that has been put into place over the last few years is that it is now illegal for any cash loan company to lend money to anyone who is currently serving in the U.S. military because people serving in the military have been hit the hardest by unscrupulous payday lenders in recent years.

A Temporary Solution

The important thing for anyone to remember before taking out a payday loan is that a payday loan should always be a temporary solution to any problem.

If you’re unable to pay off a payday loan within two weeks to one month it’s best to pay the loan off within two to three months because you never want to continue re-advancing a payday loan for long periods of time.

It’s very easy for anyone to lose hundreds of dollars per year re-advancing the same payday loan or taking out multiple payday loans at the same time. To avoid these problems it’s always best to practice sound financial management and if you do have to take out a payday loan make sure that you pay it off as quickly as possible.