Get to Know Arkansas Payday Lending
At one time or another, most people will find themselves in a tough spot financially. Even if you do not regularly live paycheck to paycheck, you could have an unexpected emergency expense that puts you in a position where you need cash fast.
That is why payday lending is so popular in the United States. All across the country, Americans take out billions of dollars every year in cash advance loans. The process is lauded for its convenience and speed.
Here is how getting a payday loan works:
- Write a post - dated check to the lender for the amount you need to borrow plus fees and interest charges.
- The lender gives you cash on the spot or deposits it electronically into your bank account instantly.
- On the date of your next payday (the date also written on the check), the lender cashes your check to get paid back for the loan.
Clearly, there are some benefits to payday loans. The speed with which you can access cash can be incredibly helpful in emergency situations. There is no denying that. However, it is important to understand the potential drawbacks to payday loans as well.
Some of the negatives of getting a short - term loan include:
- High interest rates and service fees - This is clearly the biggest drawback to cash advance loans. Let's say you take out a two - week loan for $200. In some places, the fees and interest on this $200 loan could be as high as $35. That's 17.5% over the course of two weeks, and when you convert that to annual percentage rate (APR), it is over 400%. That's a lot of interest!
- Very addictive - Statistics show that those who take out one payday loan often end up taking out several payday loans in the future. The allure of fast cash loans can be very addictive for some, and before you know it, you are constantly working just to catch up on your cash advance loans. The more loans you take out, the deeper you could dig your hole.
- Compromising of personal information - To get a payday loan, you will typically have to provide the lender with your bank account information, either by check or via electronic access. You should always use caution when providing such sensitive information to any party.
It is important that you weigh the benefits and the drawbacks before deciding to take out a payday loan.
Payday Loan Laws in Arkansas
Currently, payday loans are prohibited in the state of Arkansas. That means Arkansas residents cannot take out these loans, and anyone offering payday loans in Arkansas are doing so illegally.
However, it hasn't always been like this in Arkansas. Back in 2006, there were more than 250 fast cash Arkansas storefronts in the state. The industry was thriving, and it was taking in more than $25 million in fees and interest rates alone each year.
But in 2008, these types of loans became illegal. Attorney General Dustin McDaniel said on March 19, 2008 that he would be contacting all payday loan companies in the state to get them to cease offering these loans immediately. He went on to call payday lending "unlawful and unconscionable," arguing that these businesses made most of their money by targeting the working poor.
All these years later, payday lending is still illegal in Arkansas. The Attorney General's Office is in charge of making sure that no Arkansas fast cash lenders are operating within the state.
However, laws are constantly changing and there are still those lobbying to make payday lending legal once again in Arkansas. Check back on this page often to stay informed on the latest payday loan laws in Arkansas.