What You Need to Know About California Payday Loans?
In California, all payday lenders - whether a storefront or online - must be licensed by the Department of Business Oversight if they are going to do business in the state. For example, a borrower writes a $300 check, pays the $45 fee, and receives $255 in cash. The lender does not cash the check until the borrower’s next payday, up to 31 days. Other California Payday Loans informations you must know:
Maximum Loan Amount.
A consumer can borrow in a payday loan cannot exceed $300.
The Maximum Fee.
Most payday lender can charge is 15% of the face amount of the check (up to a maximum of $45). A 15% fee is equivalent to an annual percentage rate (APR) of 460% for a two-week loan.
For example: If you borrow $300 and the lender charge you the maximum 15 percent, the fee for your loan will be $45. That means you actually will be able to borrow only $255. $300 - ($300 x 0.15) = $255 and $45 fee.
Annual Percentage Rate (APR).
Lenders must tell borrowers what the loan fees equal in terms of APR. For a typical California payday loans, the APR works out to more than 400 percent.
What borrowers need to know?
- - Lender cannot make you a new loan to pay off an existing loan.
- - Lender cannot make you a new loan while an existing loan is outstanding, even if the combined balance of the existing loan and the new loan does not exceed $300.
- - Additional fees cannot be charged if you request an extension of time or payment plan. However, the payday lender is not legally required to grant your request.
- - Lender cannot threaten to prosecute you in criminal court for insufficient funds.
What the Lender Must Tell Borrowers?
- * The full fee amount, stated both as a dollar amount and APR.
- * The payment obligations.
- * The charge for returned checks.
- * That lenders cannot accept collateral and cannot require consumers to buy another product in order to obtain a payday loan.
- * That the consumer cannot be prosecuted or threatened with prosecution in order to collect payment on the loan.
What Lenders Cannot Do?
- * Accept collateral on a loan.
- * Require borrowers to purchase another product, such as credit insurance, as a condition of providing a loan.
- * Take blank checks.
- * Provide a loan to a borrower who already has an outstanding payday loan.
- * Commit any unlawful, unfair or deceptive act, or make any misleading statements.
Payday Loan Responsible Borrowing.
Borrow only as much as you can afford to pay back in full on your next payday. On the loan due date, some borrowers find they cannot afford to pay back the loan. Borrowers are encouraged not to take out a second loan from another payday lender to repay the first, as this can lead to a cycle of debt from which it will be expensive and difficult to recover.
Filing a Complaint.
To file a complaint against a payday lender, call the DBO at 1-866-275-2677, or complete online complaint form (recommended) here. http://www.dbo.ca.gov/Consumers/consumer_services.asp and Other California Payday Loans Law.