Hawaii Payday Loans, Laws & More
If you need money for a must - pay expense, it can be very stressful to realize that payday is a week or more away and you don't have it. In these situations, you may be very limited in your options, especially if the expense has to be paid right away.
A bank loan isn't practical for a short - term loan, it would take a long time to qualify and you might not be able to get a loan if you have bad credit. If you have a credit card available to you, you could probably get a cash advance but that might take some time as well. Not only that, but there are many people who do not have a credit card or who cannot qualify for a credit card.
This essentially leaves only one option: fast cash loans also know as a payday loan. Payday loans have a very bad reputation and there are a lot of good reasons why financial experts advise you against taking them. The biggest issue and the reason you are so strongly warned against payday loans is the very high cost of borrowing the money.
The annual percentage rate (measure used to assess how much it costs to borrow money) can sometimes exceed 450 percent. The average credit card, on the other hand, usually doesn't exceed 30 percent APR. Loans are usually measured in the amount of interest that they charge, with APR standing for the total interest cost over the course of a one - year period. This measure is used for all loans even if you don't borrow money for a full year to make it easier to compare different loan products that might have varying terms and conditions.
The APR is so high because you pay big fees for a very small loan that doesn't require a credit check. The high cost of borrowing is also a problem because it can essentially cause you to get caught in a debt spiral. You borrow on a payday loan; it costs you more to pay that loan back and you again run out of cash before your next payday so you have to borrow again.
Despite these downsides, however, if you are in a situation where you need cash and have no other easy solution, a payday loan can be the best and the only possible answer.
Hawaii Laws on Payday Loans
Hawaii addresses payday loans in Rev. Stat. Ann. 480F - 1. This law allows payday loans to be issued, but for check cashers only. The laws related to payday loans also impose certain limitations.
For example, the loan tenure required for payday loans is 32 days and the maximum amount of money that can be borrowed is $600. The fees and finance charges that are assessed are capped at 15 percent of the check's value, and the annual percentage rate (APR) on a $100 loan is this capped at 459 percent.
Hawaii fast cash borrowers are also limited to having one loan out at a time and there are no rollovers permitted. Neither consolidation nor refinancing is permitted either.
Stay Educated About Payday Loans
While some states have outlawed payday loans entirely in order to protect consumers from what some consider being "predatory loans," Hawaii instead chooses to regulate payday loans. The state thus leaves this financial product as an option for people who need it while imposing certain restrictions.
For any consumer or individual who is in need of a payday loan, understanding Hawaii's restrictions is very important. By understanding the restrictions, you know exactly what types of protection the law provides and what it doesn't provide. This will help you to see where you need to watch out for yourself and make sure you don't get taken advantage of by a lender who isn't acting honestly or within the bounds of the law.