Know Michigan Laws and Decide If Payday Loans are Right For You

Payday loan, cash advance, or check advance loan are commonly used to describe what Michigan law refers to as a deferred presentment service transaction. One who is licensed in Michigan to offer a payday loan is a legit payday lender. A payday loan is a small, short-term, high-cost financial where the customer gives an advance check to the lender for the repayment of the payday loan principal amount and loan service fees.  In exchange of this, the lender issues required immediate cash, check, or money order, depending on the needs of the customer.  Usually, payment is made from the customer’s very next paycheck.  To qualify, the customer only needs U.S. personal identification, an active checking account, and proof of regular income from employment.

How Do Lenders Know If Customers Have Any Outstanding Payday Loans?

The lender first of all, asks, for the borrower’s name, address, Social Security number, National I.D., loan amount required, the check to be used in future to cover the payday loan, and the date of the requested payday loan. To check if an applicant has more than one outstanding loan transactions, the lender must check an electronic database maintained by the state.  If the applicant has more than one outstanding loan, then the lender cannot issue another one.  Also, it is customer’s obligation to sign a statement indicating that he/she does not have an outstanding payday loan with the current payday lender as well as does not have more than one payday loan with another payday lender in the State.

What are Michigan State Laws for Payday Loans?

During a payday loan procedure, an applicant is required to sign a loan agreement which includes following terms and conditions:

1. A payday loan service is not intended to meet long-term financial needs.  In Michigan, check cashing could be only deferred for up to 31 days.
2. Only use this service to meet short-term cash needs.
3. Michigan State law prohibits payday lenders from entering into this transaction with the borrower if the borrower already has an outstanding loan with the same lender or has more than one outstanding loan with any other licensed payday lender in the State.
4. The lender must immediately give a copy of signed agreement to the borrower.
5. The requested loan amount will be issued to the borrower by check, by money order, or in cash, as per the borrower’s convenience.
6. State law entitles the borrower to the right to cancel the agreement and receive a refund of the fee.  To do this, the borrower must notify lender and return the money received within one business day.
7. Michigan Payday Lending State law prohibits the lender from renewing loan for a fee.
8. State law prohibits us from using any criminal process to collect on this agreement
9. State law entitles the borrower to file a complaint against the lender, if the lender violates any law. A borrower can call the Department of Insurance and Financial Services to file a complaint.
10. If the borrower is unable to pay back and has entered into 8 outstanding payday loans with any lender in 12-month period, he can request a repayment of all the loans in installments under debt consolidation program.  However, the borrower may be charged an additional fee for this service.  While enjoying this consolidation service, the borrower cannot apply for any other short term loan in that period.

If any needy consumer thinks that he/she is capable of abiding to these laws, then he can apply for these short term loan services either by visiting store front or online website.