Alabama Payday Loans, Rights & Laws
There may come a time when you find yourself in a situation where you need cash fast. Maybe you need to pay rent before your grace period passes by, or maybe you need to put food on the table but your next paycheck isn't coming for a couple of weeks. Whatever the reason, you may end up considering taking out a payday loan.
A payday loan is a type of short-term loan that works like this – you write the lender a post-dated check for the loan amount plus fees, and in return, the lender gives you the money you need instantly. When your next payday rolls around, the lender will then cash that check.
Alabama fast cash loans are an attractive choice for many because they offer quick approval, instant cash, and an easy process because there's not a lot of paperwork to fill out. But critics of payday loans point to the high interest rates and fees, warning consumers to be judicious when considering these types of loans.
Alabama Payday Loan Laws
While the payday loan concept is essentially the same from state to state, each state does have its own laws that govern the industry. These laws are put in place with the intention of protecting borrowers and making sure their rights are always upheld.
There are many facets to Alabama payday loan laws, but the main points you should know are as follows:
- The minimum term for a payday loan in Alabama is 10 days. That means lenders must give borrowers at least 10 days before cashing their check.
- The maximum term for a payday loan in Alabama is 31 days. You cannot take out a cash advance loan for a longer period of time.
- The maximum fees and finance charges on a payday loan cannot exceed 17.5% of the loan amount. Therefore, if the loan amount is $300, the fees and finance charges could not exceed $52.50.
- The maximum payday loan amount is $500. You cannot take out a short-term loan for more than this amount.
- The borrower is allowed the original loan term and one rollover to pay the balance of the loan.
- In the event that the person cannot repay the loan amount in one lump sum, the lender does have the option to let the borrower pay back the loan in 4 equal monthly installments.
- Lenders can charge an additional fee for bounced checks.
- Criminal action cannot be pursued against borrowers who fail to repay a payday loan unless the check is returned because the checking account has been closed.
Educating yourself on the payday loan process and Alabama payday loan laws is absolutely essential if you are ever considering taking out a payday loan. You need to know your rights as a consumer so that you can protect yourself and your finances.
Be Smart about Payday Loans
Applying for a fast cash Alabama advance is easy and the fact is that there are upsides and downsides to these loans. The upsides are that you can get cash quickly and easily, which can be very helpful in emergency situations. The main downside is that these loans often have very high interest rates and fees. For example, on a 14-day Alabama payday loan of $100 with a 17.5% maximum fee, that would work out to an APR of over 456%.
As with any type of loan, you need to carefully explore all of your options and understand exactly what you are getting into before taking out a payday loan. A little knowledge can go a long way to protecting yourself and your finances when taking out these short-term loans.
Of course, laws are always changing and being updated, so we encourage you to check this page regularly for the latest information on Alabama payday loans.