What You Need to Know About Idaho Payday Loans?
A payday loan is a cash advance secured by a personal check or by an electronic payment authorization. Idahoans to be aware of their rights when considering a payday loan. If you are considering a payday loan, prior to obtaining the loan, be sure that the lender is licensed with the department. Whether the payday lender is an online company or is local, it must maintain a license with the department to offer and make payday loans in Idaho.
Most payday loans work like this: If you need to borrow $100 for two weeks. You write a personal check for $120; $20 is the fee to borrow the money. The lender agrees to hold your check until your next payday. When that day arrives, either the lender deposits the check or you renew the loan and are charged $20 more to extend the financing 14 more days.
If you agree to electronic payments instead of a check on your next payday the lender would debit the full amount of the loan from your checking account electronically, or extend the loan for an additional $20. The cost of the initial $100 loan is a $20 finance charge, which works out to an annual percentage rate of 521 percent. If you renew the loan three times, the finance charge would climb to $80 to borrow the $100.
Idaho law requires the following from payday loan companies doing business in Idaho.
- - Payday lenders doing business in Idaho must be licensed before offering payday loans (A payday loan made in Idaho in violation of licensing requirements is void, uncollectable and unenforceable).
- - Payday loans are limited to 25% of a borrower’s gross monthly income or $1,000.
- - Each licensee must post a notice of fee costs, expressed in a dollar amount as a cost per $100.
Maximum Loan Amount.
- Payday loans in Idaho are limited to 25% of a borrower’s gross monthly income or $1,000
Annual Percentage Rate (APR).
Payday loan fees average about $20 for every $100 borrowed for a fourteen day period. Annualized, that amounts to a 521 percent annual interest rate.
For example: If you need to borrow $100 for two weeks. You write a personal check for $120; $20 is the fee to borrow the money. The cost of the initial $100 loan is a $20 finance charge, which works out to an annual percentage rate of 521%. If you renew the loan three times, the finance charge would climb to $80 to borrow the $100.
What borrowers need to know?
- - You will be required to pay additional fees if the payday loan is renewed rather than paid in full when due.
- - You have the right to rescind the payday loan at no cost no later than the end of the next business day following the day on which the payday loan is made.
- - Payday loans may contain high-cost features, and borrowers should consider alternative lower-cost loans.
- - You have a one-time right during any consecutive twelve (12) month period to convert a payday loan into an extended payment plan with no additional fees.
- - If you are unable to meet your payday loan obligation, contact your lender before your payday loan is in default and request a no-cost 60-day extended payment plan with at least four (4) equal installments which, by law, the payday lender is required to offer you once per 12 months.
- - The borrower may rescind/cancel the loan, at no cost, no later than the end of the next business day following the day the payday loan was made.
What Lenders in Idaho Cannot Do?
Payday loan companies doing business in Idaho are prohibited from:
- * Making a payday loan in Idaho in violation of Idaho’s payday loan licensing requirements.
- * Making a payday loan to any borrower in an amount greater than 25% of the borrower’s gross monthly income or $1,000, whichever is less.
- * Accepting payment for a payday loan through the proceeds of another payday loan made by the same payday lender.
- * Making more than two (2) re-presentments of a borrower’s check, or the electronic equivalent, to a financial institution for payment of the borrower’s payday loan obligation.
- * Engaging in unfair or deceptive acts or practices in advertising or conducting business.
- * Accepting any property, title to property, or any other type of collateral, aside from a post-dated check or its electronic equivalent, for a payday loan.
- * Renewing a payday loan more than three (3) consecutive times. After three (3) renewals the loan must be paid in full before another payday loan is extended.
- * Imposing any other fee to a payday loan borrower other than the agreed-upon finance charge.
- * Failing to offer a 60-day extended payment plan with four (4) equal installment payments once per consecutive 12-month period for a payday loan borrower when requested by the borrower before the payday loan is in default.
- * Imposing any additional fee to a payday loan borrower during a required 60-day extended payment plan.
If you believe that the lender has violated the law, you may file a written complaint with the Idaho Department of Finance. Filing a complaint does not limit nor impair any rights you may have against the lender.