Connecticut Payday Loan Laws

Thanks to the usury and small loans laws in place, payday loans are illegal in the state of Connecticut. Technically, their residents are safe from predatory lending, but the payday loan companies utilize loopholes to bypass the laws.

• Maximum Payday Loan – Prohibited
• Maximum Payday Loan Annual Percentage Rate – Prohibited

Most payday lending is synonymous with usury and predatory lending. In an effort to keep the residents of Connecticut safe from these types of loans, lawmakers enforced many strict lending and payday laws. However, some argue this has only driven the payday lenders to loop for ways to bypass these laws and regulations and the lenders have. They resort to several common tactics to operate in Connecticut and not have to be accountable for any lending law whatsoever.

One especially deplorable method these payday loan companies use it to financially bully and bribe impoverished American-Indian tribes. The owners of payday loan establishments will offer these tribes money in the form of rent or a tiny percentage of the revenues earned by the payday loan business. The reason this is allowable is because reservations and tribal land are allowed to be govern under their own laws, to a certain extent, just as you can find casinos on reservations in states where gambling is prohibited. This is the same principal, but a different industry.

Another commonplace bypass many payday lenders tend to use is to operate their actual business outside of the state. Connecticut is no different. Searches online will reveal many online payday loan services that will lend to Connecticut residents. Of course, the borrower will never know they are most likely overseas and therefore, do not have to abide by Connecticut payday laws. The interest is normally very high and above the usury laws. They get their customers by saying they provide loans to help lift the client out of debt, when actually his or her debt is only mounting under the tower of interest.

If Connecticut residents cannot drive to some point within their state to the payday lender’s brick and mortar location, that means they are most likely operating in a less than reputable fashion. Borrowers are better off looking for other means to obtain the financial assistance they need. Using the services of any one of the online payday lending services will only prove to be disastrous. Most borrowers end up defaulting of these high interest payday loans.

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