North Dakota Payday Lending Information
If you are living paycheck to paycheck or money is tight, you may have a problem if you find yourself with an expense that must be paid immediately that you do not have the money to pay. Unfortunately, many people find themselves in this situation when they have an unexpected car repair bill, home repair expense or other surprise expense that must be addressed immediately.
When you cannot wait until your next payday to get the money you need to meet your expenses, you have a limited array of options. Those with credit cards might be able to take a cash advance, but there are a lot of people who don't have credit cards and who cannot get them because they have bad credit. Traditional bank loans don't work well for these types of scenarios either since these are long - term loans with lengthy applications that require good credit.
For those looking for short - term loans to get them through until payday, this essentially leaves one option: payday loans or fast cash loans. Payday loans fill a very specific niche market. Those who have bad credit and who need a loan to get them through until his or her next payday use these loans. The loans are usually for small amounts and it is possible to obtain a payday loan quickly just by providing a bank account and showing that you have a reliable paying job.
Payday loans are an important solution for those in a tough spot, but many regulators and many financial advisors are staunchly opposed to payday loans. This is because there are some significant downsides to these loans that result in the lending being seen as predatory.
The major issue for most regulators and financial advisors is that taking a payday loan is a very expensive way to borrow money. When you take a payday loan, you are charged high fees despite the fact that the loan is for a small amount and despite the fact that the loan usually is for a very short period of time (typically around two weeks). When looking at the fee in terms of the annual percentage rate (the annual interest cost of borrowing the money), the cost of a payday loan usually works out to an effective interest rate of around 450 percent or more. To understand how high this APR is, consider that even most high interest rate credit cards have an APR of around 30 percent or less.
North Dakota Payday Loan Laws
Due to the very high interest fees, some states have made payday loans illegal. North Dakota is not one of those states. North Dakota allows payday loans but they are regulated in North Dakota Code 13 - 08, which deals with "Deferred Presentment Service Providers" (aka payday loan lenders).
Under the law fast cash North Dakota loan lenders must be licensed in order to issue payday loans. The maximum loan amount that can be issued to a borrower is $500 and the maximum duration of time that a loan tenure can last is a period of 60 days. The finance charge and fees for a loan are also capped at 20 percent plus database fees.
While this 20 percent cap may make it seem like a payday loan is a good deal, remember that this is a 20 percent interest rate when you borrow money only for a very short period of time like 14 days. This actually works out to an APR of around 520 percent per year, which is a very, very high interest rate to pay to borrow money.
Stay Educated About Payday Loans
North Dakota's payday loan laws ensure that lenders are licensed, that they inform their clients about the terms of the loan, and that lenders are capped in how much they can charge. While payday loans are still very expensive, these laws do provide important protections to those in North Dakota who may wish to borrow money.
Those who are considering pursuing a North Dakota fast cash loan need to be aware about what protections the law does and does not provide so they can make an informed choice about when and how to borrow.