Payday loans are great for people who are in dire need of money. A payday loan is a loan type that comes with a high-interest rate and is essential in covering unplanned expenses which include utility bills, medical bills, home repairs, and so on.
However, these loan types are regulated in different states. This implies what is considered appropriate in some states may not apply to others. There are states in the United States that consider payday loans illegal.
For this reason, if you reside in Arkansas and are considering a payday loan, there are certain things you must know.
Are Online Payday Loans Legal In Arkansas?
No, payday loans are not legally recognized in Arkansas. Loans that have an interest rate of above 17% APR are not encouraged in Arkansas. Considering that online payday loans also have triple-digit interest rates and as such, they are not allowed in the present law.
Usury Laws In Arkansas
Usury is an act where people lend money using high-interest rates. Arkansas is one of the states in the United States that has stringent usury laws. Arkansas is one of the states that placed specific interest rates in its constitution.
The Arkansas constitution put a law in place in 1874 that the interest rate is 10% and it has been this way for a century. But, in 1982, the law was amended according to amendment 60. Currently, the maximum interest rate that lenders charge borrowers in Arkansas is 17% or in some cases 5% when it is the Federal discount rate or below it. The Federal discount rate is believed to be the rate at which the Federal Government gives banks some amount of money.
History Of Online Payday Loans In Arkansas
In 1999, the Arkansas check-cashers became very popular. The law equipped the check-cashers with the privilege of charging reasonable fees to people to help take care of the business cost. Interestingly, the law did not consider these fees to be the same as interest rates, many companies were able to conduct their activities regardless of the usury laws.
Lenders with personal checks were capable of cashing up to 10% of the check. In the same vein, companies were also at liberty to charge $10 for any deferred presentment option. To this effect, anyone can write a check above what was available in the account. Thus, the company would hold on to the available check until the next payday of the borrower.
The check-cashers act was effective up until 2008. It was at this point that the Supreme Court ruled against it and maintained it violated the constitution of the State. Therefore, the payday loan industry had no other option but to stop operations in the state.
Now, it would be difficult to come across a payday loan provider in Aransas.
Are There Chances Of Getting A Payday Loan In Arkansas?
Although it is easy to get online payday loans in different states, it cannot be said for Arkansas because it is considered illegal. As such, it is expected that you work closely with companies that are permitted to do business in Arkansas.
There have been various instances where consumers and Consumer Financial Protection Bureau (CFPB) exercised their rights and sued lenders who violated the stipulated usury laws by trying to collect outrageous payments. If you are convinced you have gotten an illegal loan, you can legally file a Complaint Protection Division.
What Are Other Alternatives To Online Payday Loans In Arkansas?
Even if it is impossible to get online payday loans in Arkansas, there are still alternatives you can choose from:
Get a loan from a bank
If you have good credit, you can easily get a loan from your bank or credit union. These loans are associated with reduced interest rates and are legal in Arkansas. Interestingly, there are specific times to repay the loan.
Another good alternative is to borrow money from family and friends. There may likely be one or two persons that may have the capacity or willingness to assist you. Just ensure you work out a friendly budget.
Get an advance on your credit card
If you have a credit card, you can comfortably borrow money using your credit card. This means you can borrow cash even when it is above your cash limit. But, you may pay high-interest rates.
If you have any valuable item you want to sell, you can take it to a pawn shop and give it as collateral to get money. In some cases, you can be given a loan based on the value of the item. Here’s the catch! You may lose your prized item if you don’t pay it back together with the interest rates.
Contact your lenders
In Arkansas, it is advised that you contact your lenders if you are in an unpleasant financial position.
Payday Loans Are Helpful But This is Not The Case For Arkansas
For people in Arkansas, payday loans are not the right means to get short-term loans to settle their financial issues. But, in other states, it is an ideal way of getting money to take care of some unexpected expenses.
While it may be difficult for you to get a payday loan in Arkansas, there are still some available options you can explore. So, don’t be discouraged! There is always light at the end of the tunnel. Conduct your research and find out the options that works best for you.