America Cash Loan

By: EconomyWatch Content   Date: 4 December 2009

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The American cash loan regulations are different across individual states. Though millions of Americans are burdened with some sort of debt, the American cash loan industry has grown tremendously. However, many financial experts do not advocate the high cost practices of payday lenders and consider them against consumer protection.

America Cash Loan: Eligibility Criterion

To qualify for an American cash loan, one needs to:

· Be a US citizen.

· Have a regular job.

· Draw more than $800 monthly salary.

· Have no involvement in any sort of criminal activities.

· Should be above 18 years in age.

America Cash Loan: State Regulations

Payday loans are legal in 37 US states. States such as New York, Georgia, New Jersey, North Carolina, Pennsylvania, Maine, Maryland, Massachusetts, West Virginia, Connecticut, and Washington, D.C. do not regulate payday lending.

In many states, interest rates that exceed a certain APR are subject to usury laws. Some cash lending institutions have associated themselves with nationally-chartered banks based in other states that do not have usury ceiling, to get around usury laws. This practice is called ‘rent-a-bank’ model or ‘rate exportation.’

Under the federal Truth In Lending Act (TILA), the payday lenders in every state are required to disclose all fees. In 2005, the FDIC issued guidelines to discourage long-term debt cycles. Thus, since 2007, no bank that is federally insured can engage in payday lending business. 

The number of payday loans that a borrower can obtain at a time is also limited in some states. To make it successful, every state would need to maintain single, real time databases. As per this system, every licensed lender is required to carry out a real time verification of the eligibility of loans seekers before processing a loan.

In some states, such as Virginia, the number of loans that a borrower can take each year is capped. Other states, such as Oklahoma, allow customers to have more than one outstanding loan.

Some states such as Virginia also cap the number of loans that are borrowed by an individual every year or stipulate that after a fixed number of loan renewals, the lender must offer a lower interest loan with a longer term. This enables a borrower to get out of the debt cycle. Borrowers can circumvent these laws by taking loans from more than one lender if there is no an enforcement mechanism in place by the state.

However, some states allow that a consumer can have more than outstanding one loan outstanding (Oklahoma).


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