Hawaii Payday Loan Laws

Hawaii payday laws mostly fall in line with most other states where these loans are legal. They are as follows:

• Maximum Payday Loan Amount – $600 dollars
• Minimum Payday Loan Terms – Unspecified
• Maximum Payday Loan Terms – 32 days
• Maximum Quantity of Outstanding Payday Loans – Only one
• Maximum Amount of Payday Loan Extensions – Zero
• Maximum Payday Annual Percentage Rate (APR) – 459 percent
• Maximum Payday Financing Interest Fees – $17.65
• Maximum Payday Annual Financing Interest Rates – 15 percent of loan
• Maximum Allotted NSF Check Fees – $20 dollars only, no other damages
• Maximum Allowed Criminal Actions – Only for check cancellation or closed banking account after payday loan taken

Payday loans are legal and regulated in Hawaii, but acquisitive payday lenders have been able to bypass many of these laws through creative tactics. One way is by operating a check cashing and/or a sale-leaseback service. A sale-leaseback service is similar to a pawn shop; however, the customer does not have to bring in the item to get the cash. He or she only has to provide a postdated check for the loan amount and the sale-leaseback service fees. The check is then held until a designated date, usually payday for the customer. On said date, the payday lender will deposit the check.

Another bypass used by many payday lending services is to simple claim they are not in the business of giving payday loans. They have partnered with a bank, usually in another state or country, and claim to only broker and guarantee standard loans. Therefore, they can avoid any payday APR and interest rate caps. However, the lenders will charge high brokering fees and financing rates. In some instances, these banks are even owned by family members living in other countries. This practice is called rent-a-bank.

One other common tactic used by payday lenders is to disguise exactly how high the APR is by offering information, such as per $100 dollar rates instead of the total loan APR. This is a very sneaky and malicious practice.

By using loopholes to get around the payday laws, these lenders will even go as far as not laying out all the fees and interest charges that are attached to the loans. One way for borrowers can protect themselves from predator lending is by reading all the paperwork carefully before signing it. In addition, if they have a question about fees because they are not listed or understandable, they should pass on the payday loan. Otherwise, a vicious cycle of debt will begin that is nearly impossible to get out of.

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