Favorable conditions for ayday lenders in Louisiana

Cash advances provided to a customer for a short term in return for his paycheck are called payday loans. As a rule a borrower just needs to present a post-dated paycheck that includes a loan’s sum and extra financial charges. In exchange for it he receives the necessary cash amount. On the due date, the borrower’s next payday, a lender cashes the paycheck. Because of their expensiveness payday loans are highly criticized by many legislators and even eliminated in a number of States. In Louisiana payday lending industry is lawful. But payday lenders are to satisfy several criteria in order to legally offer their services throughout the State.

Loans amounting more than $350 are prohibited to be given at one time. The maximum lending period equates 60 days. The following fees and charges are applied to payday loan borrowers. A fee for preparing documents makes up $5. Interest rate is 16.75% of the paycheck or $45. If borrowers default on repaying the loan within a period ranging from 1 to 12 months, they are required to pay 36% per year. If a borrower’s default period exceeds 13 months, the rate is 18%. $25 is the maximum financial fee which can be charged for a $100 loan taken for 14 days. Therefore, the annual interest rate for such loan amounts 650%.

There are no limits on the number of times borrowers can apply for payday loans. But Louisiana citizens are not allowed to extend, roll over are renew the loans. Every payday loan is to be repaid until the deadline. However, a borrower has a chance to take one more loan while not paying back the previous one. The rate for the loan in that case makes up 25% plus extra financial fee.

The legislation of Louisiana doesn’t require payday lenders to provide the data about payday loans’ amounts, their terms and conditions, but lenders are advised to inform their customers about these details. Borrowers, in turn, are to pay attention to this information, not to omit the fine print and to make every payday lending transaction clear to them. With regard to collections, one insufficient funds fee is allowed to be charged for a payday loan. Criminal suits of any kinds against borrowers are strictly forbidden in Louisiana.

As we can see, Louisiana legislative acts create rather favorable conditions for payday lenders operating in the State. There are no laws that ban payday loans or strip lenders of profit. Louisiana is one of the best States where payday lending companies can successfully work and set huge interest rates for their loans, sometimes reaching up to 1,000% per annum. So that, the State residents should act reasonably when applying for payday loans and consider all related issues wisely.


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