California Payday Loan Laws

California has some of the most regulations and law on payday loans in the U.S. The state enacted the following after its residents were getting caught up in a lending cycle, which resulted in a large number of bankruptcies.

• Maximum Payday Loan Amount – $300 dollars
• Minimum Payday Loan Terms – 31 days
• Maximum Payday Loan Terms – 60 days
• Maximum Quantity of Outstanding Payday Loans – One
• Maximum Amount of Payday Loan Extensions – None
• Maximum Payday Annual Percentage Rate (APR) – 459 percent
• Maximum Payday Financing Interest Fees – $17.65 dollars
• Maximum Payday Annual Financing Interest Rates – 15 percent
• Maximum Allowed Criminal Actions – None

Lawmakers needed to do something to stop the payday loan debt plaguing their residents. If they sat back and continued to watch as the loose regulations on these types of loans went unchecked, the results would have been devastating. There are more than 3,000 payday lending companies operating in the state. Therefore, the need for tough laws was immense.

Under California payday laws and regulations, lenders must be licensed and registered with the state. If a lender is not, they are giving out illegal loans that are not subject to California laws. Payday loans must follow all the regulations mandated by the state. For example, 459 percent APR must not be exceeded to be legal.

To further protect their citizens from predator payday lending services, the state has make it illegal for a lender to give out several loans to one individual at one time. Each previous loan must be paid in full before the next one can get approved. Also, the lending companies Return Check Fees cannot be over a one-time $15 dollar charge. Laws also prohibit additional interest to be applied to lender approved extensions. In addition, all lending paperwork must be east to follow by all borrowers, not in confusing or coded language and available in his or her native tongue.

Some lenders try to get around the payday laws by having more than one lending company and suggesting their client to open another loan at that establishment. Other lenders pose as registered lenders, when in essence they are nothing more than loan sharks. Since they are not under any state regulations, many will lend large amounts of cash with high interest rates and expect the loan to be repaid in full on demand. State officials are still trying to weed out all the disreputable payday loan service companies by putting new restrictive laws up for vote each year. However, residents are protected from a lender to threaten criminal prosecution for any payday loan default.

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