The Truth about Wisconsin Payday Loans
Borrowing money can be a complicated process, especially if you have bad credit and if you need to obtain a quick loan. Bad credit or even having no credit history at all can result in you being unable to get a credit card or unable to get a bank loan. Both credit cards and bank loans can also have lengthy application processes and waiting periods.
As a result of these issues, those who need a fast cash loan and who need it quickly have limited options. For most in this situation, the best and the only option is to obtain a payday loan.
A payday loan is a temporary unsecured loan, which means that no collateral is required and the loan has to be repaid in a very limited amount of time. Typically, you will have a payday loan for around two weeks although this period may be shorter or longer depending upon the circumstances. This short - term length for the loans is how this type of loan got its name. The purpose was and is to tide you over by providing you the cash you need until you get your regular paycheck.
Payday loans are a solution to people who have a pressing financial need that cannot wait until payday. If you need to visit the doctor now, for example, or get your car fixed so you can keep going to work, a payday loan can provide the answer. Payday loans also qualify you to borrow based on the fact that you have income and a bank account. This means that even people who have bad credit are generally able to obtain a cash advance loan if they need one to get them through until payday.
The convenience, the speed at which a loan can be obtained, and the lax requirements to qualify for a loan make payday loans attractive but this does not come without cost. Lenders need to be able to protect themselves, and lenders have also found that they can make a significant profit on payday loans. They do this by charging very high fees to those who are in need of these short - term payday loans.
The fees that are charged are the cost of borrowing money, and so can be expressed in terms of annual percentage rate (APR). This is the annual interest cost that you pay in order to borrow. Since high fees are charged and payday loans are short - term loans, the APR is often extremely high for borrowers who take on these types of loans. To understand just how high, consider that the average high interest credit card will have an APR below 30 percent while the average mortgage generally has an APR of six percent or less. A payday loan, on the other hand, can have an APR of 450 percent when you borrow $100 for two weeks.
You need to consider whether the high cost of borrowing is truly worthwhile before you agree to take out a payday loan to meet your immediate financial needs.
Wisconsin Laws on Payday Loans
Due to the high costs and the fact that payday loans cater to those with bad credit, financial advisors and lawmakers have routinely expressed concern that these loans are predatory loans that take advantage of people who are poor or desperate.
To try to protect the vulnerable, laws have been passed imposing limits on what payday loan lenders are able to do. The majority of states have at least some types of laws, and Wisconsin is one of the states that impose limitations on payday loans.
Fast cash Wisconsin lenders are licensed under Section 138.14 of the Wisconsin Statutes. Payday lenders are permitted by law to accept checks or authorize automatic funds transfers in order to issue payday loans. In other words, payday lenders can lend you money for a short period of time with the understanding that they will cash a check to obtain the money or debit the money out of your bank account on a pre - arranged day.
However, there are limits to how much money someone can borrow. A person is able to take a Wisconsin fast cash loan equal to or less than $1,500 or 35 percent of your gross monthly income. This ensures that you will not borrow more than can be paid back. Payday lenders must also provide pre - loan disclosures required under S. 138.14(9g) which include information in both English and Spanish about the fees charged for the loan. There is, however, no cap on interest charged.
Stay Educated About Payday Loans
Wisconsin does provide some protection by ensuring that consumers cannot borrow too much and by requiring lenders to disclose the terms of the loan to consumers. However, these protections are limited and it is up to you to educate and protect yourself so you do not get into financial trouble as a result of payday loans.