Utah Payday Loans : Facts and Fiction
There are a number of ways to borrow money to meet long - term financial goals, including bank loans and credit cards. However, it can take a long time and a lengthy application process to obtain any of these types of loans, and these loans are not intended to meet short - term financial needs. Further, those with bad credit or no credit may be unable to obtain financing through these conventional loan solutions.
In situations where someone needs quick cash the best and only alternative may be a payday loan which is often called a fast cash loan. Payday loans have a very bad reputation among financial advisors, and with good reason. Payday loans typically charge very high fees for small loans that are issued for only a week or two. A person who takes a 14 - day payday loan for $100 may end up with an effective annual interest rate (APR) in excess of 450 percent. This is a huge amount of interest to pay when considering even a high interest credit card will not usually have an annual percentage rate of more than 30 percent.
However, the fact that payday loans have a bad reputation and high fees does not mean that they are never a viable solution. In situations where someone truly needs short - term cash and has no other alternatives due to bad credit or no credit, a payday loan can provide a solution. Taking a payday loan, for example, would be preferable to not being able to repair the car you need to get to work. It could also be a better solution than eviction or having utilities shut off and having to pay a high fee to get the utilities turned back on.
The bottom line, therefore, is that payday loans can make sense but only under limited circumstances. Those who consider a payday loan should also make sure to have a plan in place to repay the loan when it comes due because extending payday loans repeatedly can quickly lead to financial disaster as the very high fees will build and build.
Payday Loan Laws in Utah
Utah has passed statutes regulating payday loans in order to try to protect consumers from potential unfair lending practices. Unlike some states, Utah does not impose any limitations on interest rates charged by payday lenders. The limitations imposed by Utah law, however, mandate that lenders are required to post a schedule of fees. The fees must be disclosed showing information on the effective annual percentage rate (APR) as well as the dollar amount of the fees.
Utah fast cash lenders cannot accrue interest once ten weeks have passed nor can they roll over or extend the loan beyond ten days from the initial execution date. Essentially, this law prevents people from rolling over a payday loan week after week indefinitely, accruing very high fees each time.
Lenders are not allowed to threaten criminal proceedings for checks returned for insufficient funds, and lenders must allow you to rescind payday loans if you return the money by 5:00 P.M. on the next business day after the initial loan was issued.
Finally, lenders are required to post in their locations the telephone number that a person can call to file a complaint for predatory lending practices. This, too, helps to provide protection to consumers as they have a resource to contact if they are being treated in a way that violates the law.
Stay Educated About Payday Loans
While the fast cash Utah laws do not limit the interest rates that you are charged, they do ensure that lenders cannot engage in the most abusive of payday practices. The laws also ensure that you are fully informed about the interest and fees you will be paying if you take on a payday loan.
The laws, therefore, allow you the information that you need in order to make an informed choice about whether a payday loan is the right option for you.