Louisiana Payday Loan Laws and Legislation
Payday loans are cash advances given to a borrower for a short period of time against his next paycheck. Generally, a borrower should write a post-dated check that indicates a loan amount and all the agreed on fees. In return he gets cash. A lender, in his turn, cashes the check on the repayment day. Payday loans are very expensive and that is why they are not approved by many lawmakers and in some states are even outlawed. In the state of Louisiana payday lending is considered legal; however, payday lenders are required to comply with certain regulations.
It is forbidden to take loans in the amounts more than $350 at a time. Loans are not given to a periods longer than 60 days. Lenders should adhere to the following charges and fees allowed: documentation fee of $5. Interest equals to+ $45 or 16.75% of check. Borrowers are obliged to pay 36% per annum if default period is between 1 to 12 months or 18% per annum if it is beyond 13 months. Maximum finance charges for such loans should not exceed $25 for $100 given for a period of two weeks. Consequently, APR for $100 loan given for a period of two weeks equals 650%.
Borrowers are not limited in the number of loans they are allowed to apply. However they cannot renew, rollover or somehow extend the loan. It is required that a loan should be paid off in due time. There is a possibility for a borrower to take another loan while having previous one already by paying 25% for the latter. It will include additional fee, of course.
There is no such strict requirement that lenders are obliged to post a notice about payday loans and all the terms and conditions. However it is desirable that lenders do so for the borrowers concern. The latter, in their turn, should be very attentive to details, do not neglect fine print and always make sure that they understand all the details of a payday loan transaction. In terms of collection lenders are allowed to charge one NSF fee per loan. Any criminal actions against borrowers are considered illegal in the state.
All in all, state law in Louisiana seems to be very favorable to whole payday lending business. There are no strict laws prohibiting lenders to operate and depriving them of profit. The state is a great place for lenders where they are not restricted in terms of rates and can freely charge 3-digit numbers for APR. It is highly recommended that borrowers be very careful and consider payday loan options carefully.
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