Washington Payday Loans Reviewed
Payday loans are often described as predatory loans because of the significant downsides associated with this type of lending. A payday loan is a fast cash loan that is unsecured and that provides you with cash very quickly upon applying for the loan. Unfortunately, you pay a very high interest rate when you take on a payday loan. In some cases, the effective annual percentage rate (APR) can exceed 450 percent. This is because you pay a high fee for the loan and because the loan is very short term.
Despite these downsides, however, people still routinely take on payday loans. This is because payday loans sometimes are the best or only option for those in need of money to get them through until payday. Someone who has a car break down, for example, may need money for car repairs right away. A credit card may not be available and it would not make sense to get a bank loan in this type of situation. A payday loan would provide the fast cash necessary and the loan would be repaid the next payday.
Payday loans are also an option typically chosen by those who have either no credit or who have bad credit. This is because payday loans have very easy qualifying requirements. You typically are not required to undergo any type of credit check in order to be eligible for the quick loan. As long as you have proof of income and you have a bank account, you should be able to get the money that you need.
Thus, while payday loans can be dangerous and can lead to financial issues as a result of the high interest rates charged, they are not inherently a bad choice in every single situation. If you have a true financial need, a way to repay the loan next payday and no other borrowing options, taking a payday loan may be a viable solution to your problems.
Washington Payday Loan Laws
Under the laws in Washington State, the Department of Financial Institutes (DFI) is responsible for regulating payday lenders and enforcing consumer protections within the payday loan industry. There are a number of different limitations and rules in Washington State that the DFI enforces and that have been passed in order to provide protection to consumers.
As of January 1, 2010, for example, there is a maximum limit on the amount of money that you can borrow in a payday loan. You are permitted to borrow either a total of $700 or 30 percent of your gross monthly income, no more.
When you take on a Washington fast cash loan, your information is registered in a statewide database. This ensures that up - to - date information is always available and that you cannot borrow more than your maximum limits even if you go to different lenders. You are also limited to taking only eight payday loans over the course of a one - year period. You will be denied a loan if you try to exceed this eight payday loans.
Those who already have an outstanding loan are also prohibited from taking on a new payday loan until the existing debt has been repaid. You can, however, request an additional installment plan on an outstanding payday loan and the term of your loan will need to be extended by the lender without charging any additional fees.
Finally, the law says that there is a maximum loan term of 45 days and that there are maximum fees imposed on taking payday loans. The maximum fee is 15 percent on the first $500 borrowed and 10 percent on amounts borrowed above $500. These limitations ensure that the loan is not crippling and ensure that you do not get sucked into an ongoing trap of payday loans.
Fast cash Washington lenders are also prevented from behaving in a harassing or intimidating manner when trying to collect on a debt.
Stay Educated About Payday Loans
Payday loans are a financial solution in certain limited cases, but they are also a financial risk. It is important you understand your rights and the laws and protections in Washington State before considering taking on a payday loan.