Payday Loans in Massachusetts
A fast cash loan is a short - term financial product that allows you to borrow money for a limited period of time sometimes referred to as a payday loan. The idea behind payday loans is that they will help you to pay necessary costs and expenses if you run into a budget shortfall before your payday comes. You apply for the loan, you provide your bank account information and information about the job that you have, and you are approved for the loan.
The simple process of getting a quick loan makes them an attractive option for many people. You don't have to worry about a credit check, which is important if you have bad credit or a history of bankruptcy or foreclosure on your record that prevents you from borrowing money. You are also able to get the money from the payday loan right away, unlike other kinds of financing and loan products that can have a lengthy application process with stringent qualifying requirements.
These unique features of payday loans will allow you to use this financial product to meet a pressing and important financial need. Instead of having your electricity shut off for nonpayment, for example, you can get a payday loan and pay the bill. You then pay the loan back when you get paid.
All of this sounds good, so you may be wondering why financial experts are so against payday loans. The reason is one simple fact: cost. Payday loans charge a lot of money for the privilege of borrowing. A fee is charged for originating the loan that you must pay back when you repay your loan. Although the loan is a short term one, the fee can be expressed in terms of the annual percentage rate (APR) in order to give you a better idea of just how much you are paying for the loan.
When you express the fees and costs associated with a short - term payroll loan in terms of an APR, you will likely end up with an APR of around 450 percent or more. This number seems high and it is very high, especially when considering a mortgage could have an APR below six percent and almost every single credit card has an APR below 30 percent except for very unusual cases.
Paying these fees for a payday loan is a wise choice only if you really need the loan and if the consequences of not borrowing and paying are worse than the consequences of paying a high cost for a loan.
Massachusetts Laws on Payday Loans
Due to the controversial nature of payday loans and the fact that so many think they are unfair because of the high interest rates, states throughout the U.S. have taken action to either eliminate payday loans or to curtail the freedom that lenders have to abuse borrowers.
In Massachusetts, the state is one of several that have taken a very firm stance and that have opposed payday loans entirely. Under Mass. Gen. Laws Ann ch. 140 section 96, as well as 209 Mass Code Regs. 26.01, the laws in the state impose a complete ban on payday loans. Payday loans are prohibited and lenders may not issue these types of loans.
Massachusetts fast cash lender laws also addresses small loans that are permitted. Under the law, a small loan can have an interest rate charged on it of up to 23 percent. An administrative fee of $20 can also be charged upon granting the loan. No higher interest rates for payday loans are allowed, which makes payday lending unprofitable and generally results in no lenders offering these types of loans to people within the state.
Staying Educated on Payday Loan Laws in Massachusetts
Knowing the law is important in order to make sure that you find a reputable fast cash Massachusetts lender. If you encounter a lender who is trying to give you a payday loan in violation of the laws of Massachusetts, you should be aware of the current legal rules and you should be prepared to walk away so you don't get into a bad financial situation.