Payday loans are beneficial for residents in Alabama, especially people who don’t have the means to access financial resources.
This loan type is essential for people who need cash for emergencies or to settle unexpected expenses. Online payday loans are usually small and the repayment time is very short. This is why it is a good option for people who need quick cash.
Various states provide their rules that guide the transaction. Here, we’ll take a look at the necessary requirements people must pay attention to so that they can make decisions if they should accept online payday loans in Alabama.
Are Online Payday Loans Permitted In Alabama?
Yes, online payday loans are permitted in Alabama.
But, the laws guiding online payday loans in Alabama are put in place to protect borrowers from falling prey to predatory lenders. The law also helps the consumers by ensuring they do not fall into any financial trouble. This is achieved by establishing laws that stipulate the amount that consumers are allowed to take.
Payday Loan Laws In Alabama
All loan payment activity in Alabama is regulated by the Alabama Deferred Presentment Services Act. Deferred presentment simply means when an individual borrows money for a fee.
The law in the state provides licensing requirements for lenders and also explains how the loan type works. To help you understand it better, we would look at important aspects of the laws and help you see what it entails before appending your signature.
How Much Are You Permitted To Borrow In Alabama?
The maximum amount that lenders are permitted to give borrowers in Alabama is $500. Although this may not seem a big amount, it is the standard limit in Alabama. Thus, it is no surprise that about two-third of the state has this same limit.
A payday loan is not the ultimate for any individual that is hoping to get a lot of money. If you need a huge amount of money, it is ideal to get a personal loan.
How Long Will It Take To Pay Back The Payday Loan?
Alabama’s law states that the suitable period to repay the loan is between 10-31 days.
If you are unable to repay your loan at the right time, you have the opportunity to roll it over once. The rollover gives the borrower the platform to extend the loan for another 10-31 days. But, the borrower would be expected to also pay additional charges on the extended loan. The fee that you pay is also the same amount as the first payday loan.
After the borrower has had the first rollover, the state law permits the borrower to begin another extended period without any additional fees. The extended period for payment is divided into four parts. To this effect, the borrower is given four months to repay the loan.
What Are The Payday Loans Fees In Alabama
The finance charge of the payday loan is estimated at 17.5% of the amount that the borrower collects from the lender. To this effect if you collect $100, the finance charge will not exceed $17.50. Even if you take out the maximum fee of $500, the finance charge will not exceed $87.50.
As such, if you decide to calculate your Annual Percentage Rate (APR), you would discover that the interest rate is higher than the other loan types. For instance, if you borrow a loan of $100, you will discover that the fee is 15% and the APR, 391%.
Lenders are also at liberty to charge 30% Non sufficient funds (NSF) if the check bounces.
Are There Restrictions On Lending Practices In Alabama?
Yes, there are restrictions for lending practices in Alabama. This is in place to protect the consumer from falling into financial pitfalls.
In Alabama, lenders are not allowed to give borrowers a loan especially when they have a deferred presentment transaction especially when they have exceeded the $500 restriction. This means that borrowers can have multiple lenders but the loan amount will not exceed $500.
Is There More To Payday Loans In Alabama?
Before you take out a loan in Alabama, ensure that the loan is given to you by a licensed lender in Alabama. You can verify the status of your lender by checking with the Alabama State Banking Department to be certain that the lender is standing right with the law.
The state law expects that certain things should be present in the loan contract so that consumers are protected. For instance, these are some of the things that you should know:
- Just above the signature, it should read “ Notice: Fees for deferred presentment transactions may be significantly higher than for other types of loans”.
- Fees, penalties and charges that you may likely face if the loan is not repaid at the right time must be clearly stated.
- The loan contract must also specify the loan agreement such as due date, amount to be borrowed, finance charge and every other relevant information.
If you notice that the lender does not spell out these facts, it could be a red flag and an indicator for you to get another source of loan.
JohnThomasFinancial only works with verified Alabama’s lenders. In this way, you don’t have to worry about dubious lenders that can get you into financial troubles.
Online Payday Loan In Alabama To Get Quick Cash
Online payday loans are suitable to get quick cash. But, this does not mean it is a good option for everyone. This is why you must understand the terms and condition of the loan before taking it out. Never forget to borrow responsibly. If you have made up your mind to apply for a payday loan, use JohnThomasFinancial.