This Article is About
payday loan
payday loan industry
short term loans
finance charge
payday loans
maximum length
red tape
state of california
length of time
California State Payday Loan Laws
Join 1000's of Authors at StreetArticles Today!

California State Payday Loan Laws

With recent interest in the amount of abuse payday loans have caused individuals, the state of California's legislature took to creating a law to reduce some of this risk. The bill, introduced in 2005 as A.B. 207 put some limitations on the interest these loans can charge on a short-term debt.

The History of Payday Loans in California

California isn't new to the payday loan industry. Though these loans have been around for some time, they were first recognized by the state as an authorized option in July of 1996.

At that time, the state of California noted the loans were, "secure, small emergency loans without the red tape."

Of course, the state government has since taken action to reduce the risks individuals face with these loans, but because they are officially recognized and therefore acceptable on the books they continue to flourish.

Limitations in California on Payday Loans

There are now legal limitations on these loans in the state of California. Those limitations include the following:

• The maximum length of time such a loan may be put into place is 31 days.

• The maximum amount borrowed is $300.

• The maximum finance charge is set at a high 15 percent of the amount loaned.

What does all of this mean? The state's 2005 law does restrict the fee from exceeding any annual rate greater than 10 percent.

Also it is a requirement that the customer write a deferred check for the funds, but that the actual name of the licensee is to be used as the payable party. Finally, these checks may be held for only 31 days prior to being presented.

Does California law do enough to protect the use of these loans? The state is working on legislation that would give the consumer a longer period of time to repay the debt.

However, this does not give the consumer any real protection from those extended terms costing more in terms of interest.

Ultimately, California law provides for very minimal protection from these short term loans. The key factor to consider here is the belief that many people have is that there is no other option.

And because of this misconception of having no other options many people end up getting caught up in what is called the payday loan cycle, which means people end up re-loaning over and over again.

And just like the misconception many people have about short term loan options, consumers do not realize they do have options to get out of the payday loan cycle.


Street Talk

Hi Leo, This is a very nice article. I would to know how one can be your affiliate.

Reply
  about 9 years ago
  

Hi Goeffrey, Sorry there is no affiliate program

Reply
  about 9 years ago
You May Also Like
Eliminating Payday Loan Debt - People Targeted for Scam
The documentation that businesses and databases maintain in the modern era is something that many people fear. Many of the things that every person does on a regular basis are documented and used in order to sell products or services. Sometimes the data is even used in order to scam…
By: David Schmidt in  Finance  >  Debt Management   Jul 18, 2012  
8
  Likes: 7

Payday Loan Laws In Oregon
As one of the most progressive states in the United States of America, Oregon has hit the nail on the head for payday loan laws. Their protection has made sure that many of the consumers in the state are not only protected from predatory lenders, but are also protected from…
By: David Schmidt in  Finance  >  Debt Consolidation   Oct 02, 2012  
7
  Likes: 8

Payday Loan Hell
In the Christian religion, and some other Judeo-Christian religions, the concept of “hell” has taken root. Many people fear hell in the afterlife and therefore maintain good relations while they are living. However, the people who are suffering with families every day are in their own type of hell on…
By: David Schmidt in  Finance  >  Debt Consolidation   Aug 30, 2012  
28
  Likes: 13

How Do I Get Out Of This Payday Loan Trap?
Working with payday loan clients, I have heard a lot of sad stories in my day. Without a doubt the worst stories are from parents who have responsibilities and have still fallen into the payday loan trap. I dread hearing “how do I get out of this payday loan trap?”…
By: David Schmidt in  Finance  >  Debt Management   Nov 02, 2012  
4
  Likes: 7

Missouri Getting Help With Payday Loan Debts
It is a well known fact that the payday loan industry funnels millions of dollars into the campaign treasure chests for many different Congress men and women. In fact, one of the states that has the biggest industry of payday lenders is the state of Missouri. They have been able…
By: David Schmidt in  Finance  >  Debt Management   Aug 10, 2012  
13
  Likes: 11

How Can I Get Out Of Payday Loan Debt?
In the consolidation business you hear a lot of people asking “how can I get out of payday loan debt?” and the answer is always the same: through hard work! Still, there are some simple tricks that you can use in order to get rid of this debt. This is…
By: David Schmidt in  Finance  >  Debt Consolidation   Oct 31, 2012  
2
  Likes: 3

Gift Giving And Payday Loan Debt
Although it may sound like a stretch to discuss giving gifts and payday loan debt in the same sentence, the two can be very closely related. Birthdays and holidays can be a huge financial drain on resources during some of the most crucial parts of the year. Right when the…
By: David Schmidt in  Finance  >  Debt Consolidation   Jun 26, 2012  
9
  Likes: 5

Payday Loan Laws In Florida
If you are thinking of getting a payday loan and you live in this state you need to check out the payday loan laws in Florida before you take the plunge. They are very much lender friendly and are set up around existing lender laws so they can legally do…
By: Shawn Lee  in  Finance  >  Debt Consolidation   Oct 29, 2012  
13
  Likes: 6

How to Get Rid Of A Payday Loan Fast
Anyone who has gotten into payday loan debt is aware of the negative affects it can have. Not only is credit destroyed, but stress can become an ever-present problem in your life that simply does not go away. The additional interest rates will continue to plague you and your family…
By: David Schmidt in  Finance  >  Debt Management   Dec 08, 2012  
5
  Likes: 5

Help Payday Loan Debt
There are many ways that you can help payday loan debt, but the first is to avoid it altogether. This might sound counter intuitive, but we are going to use this article to help you to avoid debt altogether so that you never have to worry about this crushing problem.…
By: David Schmidt in  Finance  >  Debt Consolidation   Jan 31, 2013  
2
  Likes: 4

Payday Loan Help In New York
Millions of men and women have been affected by the recession in 2008, but that does not mean that debt and other issues have to be a major concern. The people of New York were especially hard hit due to the fact that they were in the financial capital of…
By: David Schmidt in  Finance  >  Debt Management   Sep 28, 2012  
3
  Likes: 7

Help With Payday Loan Debts
Men and women are increasingly looking at bank and payday loan statements in bewilderment. Almost no other industry could get away with the type of abuse that they are able to get away with when it comes to interest rate payments. These types of payments are nearly impossible to pay…
By: David Schmidt in  Finance  >  Debt Management   Oct 02, 2012  
5
  Likes: 6

Virginia Payday Loan Laws
As one of the first states in the nation, Virginia is always looked to as one of the examples when they create their laws. In the case of payday loans, this is also the case. Virginia payday loan laws are not very complicated to understand, but many people do not…
By: David Schmidt in  Finance  >  Debt Management   Oct 05, 2012  
6
  Likes: 7

Online Payday Loan Traps, Have You Been Caught?
Kind of a catchy title, "Online Payday Loan Traps, Have You Been Caught?" unless you have been caught. There are traps to be watched out for when using these companies that will make them very wealthy and you very poor, all in a very short time. My story today is…
By: Shawn Lee  in  Finance  >  PayDay Loans   Jan 30, 2013  
22
  Likes: 19

Payday Loan Debt Help – How to Rid Yourself Of Those Loans
The American economy has been so poor for the past four years that many families are having serious trouble maintaining a family. There are many Americans who have been unable to keep their job through this downtown and the unemployment rate does not seem to be decreasing much every month.…
By: David Schmidt in  Finance  >  Debt Consolidation   Jul 21, 2012  
12
  Likes: 8

Article Views: 1256    Report this Article