A same day cash loan follows similar rules as those for obtaining a payday loan. The individual is required to present some proof of stable income and relevant personal information, and approval can be obtained within minutes. Some businesses fund same day loans online, or the borrower can get the cash that day by visiting a local store.
Regulations
This quick cash is typically borrowed for 14 to 32 days, and incurs a fee of 25% of the total or more. It is fast due to the absence of credit checks, and applicants need to meet minimal requirements to be approved. Namely: Have a job, be a U.S. resident over the age of 18, and have a valid and open bank account.
The easy access to cash through short term lending businesses has resulted in a number of predatory lending practices. As a result, many states enacted regulatory laws limiting the amount which can be borrowed, putting a cap on interest charges and fees, and defining the repayment period. This is why the majority of payday lenders are limited to creating notes for $500-$1,500 dollars.
States which are heavily regulated include Georgia, Illinois, New Hampshire, and Wyoming to highlight a few. In Georgia, no amount under $3,000 is permitted if is not in compliance with the state usury law. Basically, this puts a cap on interest for lesser sums at 16%. In Washington, payday operations are not permitted to garnish or attempt to collect on active military personnel or from those who are currently deployed.
In the Virgin Islands the industry probably does little business; the maximum loan allowed is $7,500, but it must be in compliance with laws which restrict small loan interest to 26% per year. Similar regulations are in place in West Virginia.
No Restrictions
While some states regulate heavily, many others allow the industry to charge as much as the market will bear. New York, New Jersey, and New Mexico are three states where this is the case. In North Carolina, another unregulated state, a charge of 15% on a small loan can be rolled over indefinitely, resulting in an effective annual percentage rate of over 400%.
Wisconsin, previously unregulated, recently drafted specific payday lender legislation, limiting fees to 35% of the borrower’s gross monthly earnings, and allowing amounts up to $1,500 to be borrowed. Other restrictions set proximity limits on business locations in relation to residential areas and between other payday lenders. In addition to this, the bill would limit title loans to 50% of the vehicle’s value.
Regulations are an attempt to limit the increasing state of indebtedness many borrowers find themselves in. Discouraging the practice entirely would be more complicated, however. So long as there is a growing need for short term credit from low to middle income borrowers, the industry will continue to expand to accommodate them.
In fact, developing a steady stream of regular customers is beneficial for the bottom line. As a rising number of people find themselves with damaged credit scores, turning to a same day cash lender is one of the few options they have available.
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