Payday Loan Laws In California | Debt Consolidation Payday Loans


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The state of California has passed certain payday loan laws in order to protect the rights and interests of consumers. People who borrow short-term cash advances often end up getting into a serious debt trap. Though these loan programs look like an easy option as almost anyone can qualify for it (even with bad credit) and get instant cash, yet these financing options can be very risky and expensive because of the high costs involved with them. You are strongly recommended not to go for these seemingly lucrative but risky programs. If you are residing in California and have already become a victim of these loans, knowledge about the state laws will definitely show you some effective ways on how to get out of the debt problem. If you find that your lender is involved in certain practices that are against the state laws, you can file a complaint against them. Following are some of the important aspects of the laws applicable in the state of California regarding payday lending.

Licensing Requirements

California have made it legally mandatory for all payday lenders to obtain license and get registered with the state. A lender who is not duly licensed cannot sue you for the payments. Therefore, if you are getting collection calls from a lending company, you must try to find out if they are registered with your state. If not, you may have an opportunity to wipe out your debts without making the payments. You can file your complaint with your state regulatory authorities or with the Federal Trade Commission.

Maximum Loan Amount And Number Of Loans At A Time

As per the payday loan laws applicable in California, a lender cannot offer more than $300 as part of these loan programs. Besides that, no borrowers can have more than one loan at a time. It means if a short-term cash advance is already outstanding in your name, you cannot qualify for another such program until you pay off all your existing dues. If a lender still convinces you to sign up for another program, it will be considered as illegal.

Repayment Period And Automatic Rollover

The state laws in California have also imposed certain restrictions on the repayment period. The loan term cannot be longer than 31 days. If the borrower fails to clear the debt before this deadline, the loan should not get automatically renewed. It means no additional fee can be charged by the lenders for any extension either in the form of interest or any other cost. The state payday loan laws do not make it mandatory for the lender to provide installment facilities to the borrower, but considering the very fact that lenders are not allowed to charge you additionally for extensions in due date, you are likely to be provided an in small monthly installments if you request for the same.

Rate And Fees

Though there are certain restrictions on the maximum rate and fees also, the costs are still very high. For every loan of $100 for a period of 14 days, the lenders are allowed to charge a maximum interest of $17.65, which is equivalent to an APR of 459%.

Rules For Collections

If the lender sends the loan account for collection, the borrower may be charged an additional NSF fee of up to $15. However, no criminal lawsuits can be filed against the debtor. Still, in case, the lender believes that the debtor is engaged in some fraudulent activities, they can file a civil lawsuit.

If you have complaints against some specific lenders, the payday loan laws in California allow you to file your complaint at the California Department of Corporations. You can either call them at (866) 275-2677 or make a personal visit to their office at Financial Services Division, 1515 K Street, Suite 200 Sacramento CA 95814.

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