Washington State Payday Loan Laws and Regulations

Recipients of payday loans do have certain rights under Washington state laws. The Truth in Leading Act has made the lending process more visible to the consumers. For instance, the total cost of the credit the client is seeking must be fully disclosed. Also, all finance charges are required to be listed. A full payment plan must be offered and put in writing in order to give the customer 24 hours to back out of the payday loan, consequence free. In addition to the following:

• Maximum Payday Loan Amount – $700 dollars or up to 30 percent of customers monthly income
• Minimum Payday Loan Terms – Seven days
• Maximum Payday Loan Terms – Unspecified
• Maximum Quantity of Outstanding Payday Loans – Unspecified, no more than $700 dollars
• Maximum Amount of Payday Loan Extensions – None
• Maximum Payday Annual Percentage Rate (APR) – 390 percent
• Maximum Payday Financing Interest Fees – $15.00 dollars
• Maximum Payday Annual Financing Interest Rates – 10 to 15 percent
• Maximum Allotted NSF Check Fees – $25 dollars and court fees
• Maximum Allowed Criminal Actions – None

Payday lenders in Washington must not lend to the same person more than eight times in a calendar year, must share client information in a statewide database, only give one loan at a time, not allow the customer to use a payday loan to pay for a payday loan, be Department of Financial Institutions (DFI) registered and compliant, as well as offer fee free installment plan to delinquent customers. Any reputable payday lender will follow all of these regulations. However, some of the state’s 700 payday lenders will try to skate around them.

The lenders that have found loopholes in the Washington payday loan laws, simply say they had to get creative in order to continue to operate. Some lenders are having their clients use store gift cards and/or prepaid debit cards. This way they are not technically lending cash, but are still charging interest on these gift card loans. They are every bit a payday loan, but as of now, do not have to follow the same guidelines as a cash loan.

The danger with these less than reputable lenders worm around and to find these loopholes, is that it leaves the unsuspecting consumer open for usury. In some cases where the payday lending companies were handing out the gift or debit cards, they were not disclosing the full loan terms or the APR.

Furthermore, clients were reporting having fees over $1,500 dollars on a $600 dollar payday debit card loan. Luckily, the state has begun to stop this practice with some of the more notorious abusers, but the consumer should always be aware of their states payday loan regulations and laws before entering into a loan agreement. Also, consumers need to be sure every detail of the loan is in print before signing.

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