Kansas Payday Loans Reviewed
Almost any time you hear the term payday loan, you hear about how bad this financial product is. It is true; there are a lot of downsides to borrowing money from a fast cash loan lender. There are, however, also some benefits or upsides - otherwise payday loan lenders would not be able to stay in business.
The obvious downside to payday loans and the issue that financial experts and lawmakers always bring up when it comes to payday lenders is that these quick loans can be seen as predatory. They target people that need money and who have few other options available. A person who takes out a payday loan may have an annual percentage rate (APR) of 450 percent on the money or higher. This is a vastly more expensive APR than the APR average on a credit card, which is usually about 30 percent or less. Of course, you don't have a payday loan for an entire year - but you still pay a lot of money for the short - term loan that you take.
Payday loans are also called predatory loans because they can get borrowers stuck. When you borrow and have to pay a high fee, then you need to repay both the money you borrowed and the fee. This means that you start out behind when you get your next paycheck. It is thus more likely you'll run out of money again and need to take on an additional payday loan as a result.
All of this is undeniably bad and payday loans are problematic. However, they also serve a purpose. For people with bad credit and who do not have the option of using a credit card, a payday loan can allow you to meet a necessary expense that you must pay now and that cannot wait until payday.
If you depend upon your vehicle to drive to work, for example, you can't just wait two weeks to fix your car until your paycheck comes in. A payday loan would let you borrow the money you need to take care of the problem so you can keep going to work. In these situations where you really do need money now, you may find that a payday loan is not such a bad thing after all.
Kansas Laws on Payday Loans
In various states, laws have been passed either prohibiting payday loans or limiting what lenders can do when they are issuing loans. Kansas is a state that has imposed limitations and regulations but that has not instituted a complete ban on payday loans. The state of Kansas addresses payday lending in section 16a - 2 - 404 of the state's Annotated Code.
According to the laws a Kansas fast cash loan may not exceed $500 and a borrower may not have more than two loans out at any one time. The tenure of the payday loan (the term for which the money is borrowed) must be limited to between seven days and 30 days although there is no stated rule about whether rollovers of loans are permitted or not.
In addition to limiting the amount and the duration of the loan, Kansas also imposes restrictions on how much a lender is able to charge. Under the law, a lender may charge 15 percent of the value of the loan plus administrative fees. This means that if a person borrows $100 for a period of 14 days, that individual will end up with an effective APR of 390 percent. This is lower than in many other locations where the APR reaches 450 percent or higher but it is still a very high APR and the loan is still very costly.
Staying Educated About Payday Loan Laws in Kansas
It is important that you understand your legal rights before you borrow money, and this includes before you take a fast cash Kansas loan. The law in Kansas, as you can see, does give you some protections but those protections are limited. By being informed of what lenders are allowed to do, you can be better prepared to make a choice about whether a payday loan is good financial solution for your current situation.