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Using Payday Loans in Alabama – Online Application form
The word ‘payday loan’ brings to us a lot of fear and images of people surrounded by debts on their heads. We see how some people end up with bankrupt status and falling flat on their face after engaging themselves with payday loans. We get really scared sometimes if we need to imagine about any financial emergency coming on our head requiring an urgent money outflow. With a really short cooling period, will we still be scared of taking help from a payday loan product?
It is important to understand if borrowing money through this channel should even be considered or not. Through this article we will try to see how can we use this option without getting into any undesirable situation at the same time how our Alabama State has tried its best to shield us from such loan sharks by applying restrictions.
Online Payday loans are one of the easiest loan products you can borrow these days. It scores a lot of points when it comes to the convenience and application time over other conventional lenders like banks or credit unions. The ease of minimum documentation and putting this loan application sitting on the sofa of your house makes it even more attractive. The application process is very simple asking for basic details which is compared against few qualifying criteria. The applicant must be a legal resident of the United States and should be in a legitimate job. The applicant must have a running bank account. A credit check is also done to determine if the applicant is not a declared bankrupt or already a defaulter with any other institution. If all these criteria are satisfied, the loan amount is transferred to the customer’s bank account the same or by next day.
As per the contract, the borrower is expected to repay the entire loan amount by the end of the month i.e. as soon as he receives the next salary. This repayment includes of the loan amount as well as all the applicable interest and fees. This balloon payment is made either by an already issued post-dated check or debit authorization provided by the borrower at the time of contract signing.
The major arguments against payday loans is having a substantially high rate of interest. A typical loan arrangement has an APR in the range of 500% – 700% which makes it the costliest loan contract. This amount goes even higher when the borrower requests for a loan rollover. As the nature of loan requires a complete payment by end of month, this leaves the borrower with a reduced liquidity the following month. Again this forms the basis of another borrowing and finally it ends up in a debt trap for the borrower where he is using the money from one loan to pay off another loan.
Considering all the aspects surrounding this product, payday loans in Alabama has been regulated by the Alabama Banking department. The objective of such regulations is to protect the interest of the customers. Some of the highlights under these regulations are:
- An applicant cannot borrow more than a maximum of $500 from a lender.
- Each loan to have a minimum tenure of 10 days and the maximum term can be 31 days
- The loan cannot exceed 17.50%. Financial charges of 3% per month can be levied after default. With this, the finance charge on every $100 borrowed works out to be $17.50 with an APR of 456.25%
- In case the customer is not able to repay their loan as per the agreed term on the repayment date, he can rollover the loan for maximum once in its lifecycle.
- There is no cooling off period. An individual can borrow the next day once two continuous loans are repaid.
- A maximum of $30 can be collected by the lenders as a “Non-Sufficient Funds Fee”. The attorney fee be can up to a maximum of 15% of the loan amount.
- Criminal proceedings cannot be initiated against the borrowers unless they close the bank account leading to check return.
Thus it is important for a borrower to understand his needs and obtains loans from a lender who complies with all such regulations above