Alternatives to payday loans in states where they are prohibited
Payday lenders effectively leveraged the sovereign reserve status of Native Americans. Often they forge partnerships with tribal members to offer loans on top of the internet, which is outside of state law. However, the FTC has also begun to actively monitor these lenders.
While some tribal lenders are run by Native Americans, there is evidence that many of them create what is known as “tribal rent” (plans in which a non-Native business operates on tribal lands). Payday loans are currently legal in 27 US states, while 9 other states only allow short-term in-store loans, see more information at Direct loan transfer.
The other 14 and the District of Columbia prohibit this practice. The federal regulation of payday loans is due to several reasons:
- a higher bankruptcy rate among those who resort to loans, in particular because of interest rates that can reach 1000%);
- totally illegal and unfair debt collection methods;
- automatic rollover loans that further increase the debt of payday lenders.
In terms of federal regulation, the Dodd-Frank reform of Wall Street and Consumer Protection Act gave the Financial Consumer Protection Bureau (CFPB) special powers to regulate all payday lenders, regardless of the size of the payday loan.
Moreover, the Military Loans Act sets a rate of 36% on tax refund loans and certain payday loans and car ownership loans to members of the armed forces who are on active duty and their insured dependents prohibit payday loans.
In which states are payday loans legalized and available?
Payday loans are currently legal in 37 states and illegal in 13 states. The largest and most requested payday loan states are Texas, Nevada, and California. Four other states have set limits on interest rates on payday loans. Among these states are Montana, New Hampshire, California and South Dakota. Payday loans are a way for Americans to get immediate cash when needed before payday. They can be quite necessary in times of financial emergency. Yet lenders have been criticized for being unfair to payday borrowers. In some states, payday loans and similar types of loans are banned altogether.
In which states are payday loans legal?
Thirty-seven states allow payday loans under specific laws, including Alabama, Colorado, California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Ohio , Tennessee and Texas.
Illegal states that currently completely ban payday loans include Vermont, New Jersey, Arizona, Connecticut, Georgia, Arkansas, Maryland, New Jersey, New York, Massachusetts, and North Carolina , Colombia.
Large value payday loans are permitted by law or state regulation in thirty-two states. Borrowers are protected from expensive payday loans through reasonable limits on low loan rates or other prohibitions in fifteen states. Three other states in the United States have lower cap rates or longer terms for cheaper loans. Online payday lenders generally obey the state licensing laws and rate caps of the state in which the borrower obtains the loan.
How to avoid the spiral of wage debt?
We all have financial emergencies and blocked lives. Ultimately, people choose payday loans to make up for their budget. However, unplanned borrowing leads to serious financial problems. As you already know, payday loans are just a quick fix and rarely meet our real money needs. The real solution here is to plan your finances.
Establish your credit score to qualify for quality credit services such as credit cards with competitive interest rates and private bank loans. It all comes down to borrowing and paying on time. A positive payment history leads creditors to believe that you can be trusted to pay your debts on time. Although payday loans are not legal in North Carolina, there are several options for accessing short-term emergency loans. However, some of these options are copies of payday loans and are slightly more expensive than traditional loans.
It is best to plan well and borrow payday loans from service providers only when needed. Since payday loans are a quick way to get things done, they also have negative effects. Therefore, before you even think about payday debt, be sure to consider all the other options. Maintain an ideal repayment history for long-term financial stability.
Alternatives to payday loans
Use your credit card wisely
Another way to avoid high interest rates and payday loan fees is to use your credit card responsibly. This means using your credit card only for purchases that you can afford to pay on time. Paying the balance in full on or before the due date can help you completely avoid interest payments, late fees, and possible damage to your credit rating.
Also, if you have a high credit rating, you may qualify for a credit card with an annual interest rate of 0%. For this type of card, there is an interest-free promotional period that lasts up to 21 months. If you pay the amount due before the end of the promotional period, you can avoid interest. After that, interest will be charged on the remaining balance until it is fully paid off.
Participate in financial aid programs
Depending on your income, you may qualify for financial assistance programs in your area. Some programs may provide rent assistance while others may help pay for food and other expenses. To find these programs, check with your local library or chamber of commerce.
Sell unnecessary things
Debts and loans for some people are an unattractive way to find money in a short time. How to obtain funds without resorting to loans? To do this, you can start selling your own things. This can be done through special sites or social networks by placing an ad for the sale.
The easiest way is to sell items that are no longer in use. Instead of giving them away for free, it is better to find a buyer for them and earn a certain sum. When you sell on the Internet, you must analyze the products in demand. For example, some clothes are only of interest in a given season. The higher the price, the longer the item can be on sale. So if money is urgently needed, it is worth adjusting the cost.
One of the options for receiving money in a fairly short time is to perform work with piecework payment. This can be a job on the Internet or a small position with minimal employment in a company or office. Certain types of jobs are paid by the hour or by the day, which makes it possible to find money quickly and without long-term employment.
Working on the Internet allows you to earn money in your free time from your main job. It could be :
- work as an online consultant;
- carry out translations from/to foreign languages;
- writing articles;
- editing or transcription of audio recordings;
- custom photo processing;
- design of logos, flyers, etc.
All of these options allow you to get a certain amount of money in a relatively short time.