Borrowing Money in New Jersey
There are some expenses that simply cannot wait. If your rent is due now, if you need a home repair or car repair, if you need a doctor's visit or if you need to put food on the table, you likely cannot wait until you get your next paycheck. Fortunately, there is a financial product out there that makes it possible to take a short - term loan that will allow you to meet a pressing financial need now and to repay the loan with your next paycheck. This financial product is aptly named a payday loan.
Payday loans are intended to provide a fast solution to a need for immediate cash. You can apply for and obtain a payday loan right away with no lengthy application and no long wait times to get the money you need immediately. Not only that, but you can even get a payday loan if you have bad credit or if you do not have a credit score at all. This is because payday loans look at whether you have a bank account and at whether you have a job, not at whether you may have made financial mistakes in the past.
All of this sounds good, but you are probably wondering why you have heard that payday loans are such a bad thing. The fact is that, while it is true that payday loans have all of these upsides, they also have a downside too. The downside is the very high expenses associated with a payday loan.
Whenever you take a loan, you are going to have to pay some cost for the privilege of borrowing the cash. For a payday loan, the amount that you pay is going to be expressed in terms of fees and finance charges. Unfortunately, the amount that you pay is very high. You may end up with a 450 percent APR (annual percentage rate, used to measure the cost of debt).
Since a typical credit card is rarely going to have an APR exceeding 30 percent, you will generally be spending a lot more money to borrow on a payday loan than with a credit card. In these and other emergency situations where you need to get fast cash right away for a legitimate pressing need, then a payday loan may be the right choice.
New Jersey Payday Loan Laws
Under the laws in New Jersey, even those who might benefit from a payday loan will have a difficult time finding a legal payday loan lender. This is because N.J. Stat. Ann. 2C 21 - 19 and N.J. Stat Ann. 17:15A - 47 addresses issues related to loans and lending and impose a ban on payday loans.
The laws in New Jersey also specify that there is a maximum APR of 30 percent per year for small loan charges. This is a much lower interest rate than a payday lender would typically charge to customers. The laws and low interest rates, therefore, make it unprofitable and illegal for lenders to offer fast cash New Jersey loans.
Of course, there are always some lenders who will be dishonest, who will skirt the law or who will try to get you to take on a New Jersey fast cash loan with interest rates higher than what is permitted. You need to be careful that no one preys upon you when exploring the payday loan market.
Staying Educated About Payday Loans
Knowing the law is important before entering into financial transactions. For example, knowing that payday loans are illegal helps you to make an informed choice if you encounter a lender that tries to take advantage of you or give you a loan that is in violation of the laws.