Iowa Payday Loans, Laws & Education
If you have bad credit, you know it is difficult or even impossible to get accepted for a loan. Lenders use your credit score to decide whether it is worth the risk to lend money to you and a bad score can result in a denial. This can be very upsetting if you are unable to get a credit card, especially if you have a pressing expense that you need to pay before payday comes.
When you find yourself in need of money and with some time left until payday, one option that you might have even with your low credit score is to take a fast cash loan. Often called payday loans, they have many unique features that set them apart from other types of loans. The ease of qualifying for this type of loan, even with a low credit score, is one of those best features.
Other unique features of payday loans include the time it takes to get the loan and the time you have to pay back the money. Unlike a lot of loans where you have a long application process and where you may have months or even years to repay your loan, you typically can qualify for a quick loan right away.
Unfortunately, another unique feature of payday loans is that they are among the most, if not the most, costly methods for borrowing money. The cost of a loan is expressed in terms of annual percentage rate (APR). This is true even for loans that are repaid in less than a year, like payday loans. Using a standard APR measure to assess the costs of borrowing lets you compare the amount you pay for different loans. As you see, you pay a lot for payday loans because you may have an APR of around 450 percent when a credit card has an APR of around only 30 percent or less.
Despite the cost, it can make sense to take a payday loan under the right circumstances. If there is a situation where you really need to have money available to you, a payday loan may be the answer to this problem.
Iowa Payday Loan Laws
Some states have made payday loans illegal due to the problems with high rates and fees. Others have imposed limitations on fast cash loans but still permit them. Iowa is one of the states that imposes limitations but allows the loans. Iowa addresses payday loans in section 533D.1 of their annotated code and sets forth a number of different rules.
One rule for Iowa fast cash loans is it may not exceed $500. The loans may also not exceed a term of 31 days. A maximum of two loans are permitted at one time in the state and there are no rollovers permitted.
Law restricts the finance charges that lenders may assess as well. A lender can charge up to 15 percent on a $100 loan. Once the loan exceeds $100, the lender may charge $10 on each $100 borrowed. The loans rules can work out to an average APR of 433 percent.
Staying Educated About Payday Loan Laws in Iowa
It is very important that you understand the fast cash Iowa laws and rules associated with them. By knowing what protections are afforded to you, you can know whether the loans that you are considering fall within the bounds of the law. You can also make an informed determination about whether you should take a payday loan or not, given the limitations that apply to this type of financing in Iowa.