Alternatives to payday loans in states where they are prohibited
Payday lenders have effectively leveraged the sovereign reserve status of Native Americans. Often times, they forge partnerships with tribal members to offer loans in addition to the Internet, which is beyond state law. However, the FTC has also started 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” (systems in which a non-Native business organizes operations on tribal lands). Payday loans are currently legal in 27 US states, while 9 other states only allow time-limited loans, that is, short-term store loans, see more information at Direct loan transfer.
The other 14 and the District of Columbia prohibit this practice. Federal regulation of payday loans is due to several reasons:
- a higher bankruptcy rate among those who use loans, especially due to interest rates of up to 1000%);
- totally illegal and unfair debt collection methods;
- auto-rollover loans which further increase the debt of payday lenders.
In terms of federal regulation, the Dodd-Frank Wall Street reform 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.
In addition, the Military Loans Act sets a 36% rate on tax refund loans and certain payday loans and car ownership loans to active-duty members of the armed forces and their insured dependents, prohibiting payday loans .
In which states are payday loans legalized and offered?
Payday loans are currently legalized 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 payday loan interest rates. These states include Montana, New Hampshire, California, and South Dakota. Payday loans are a way for Americans to get cash immediately when needed before payday. They can be quite necessary in a financial emergency. Yet lenders have been criticized for being unfair to payday borrowers. In some states, payday loans and similar types of loans are prohibited 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.
The illegal states that currently ban payday loans completely are Vermont, New Jersey, Arizona, Connecticut, Georgia, Arkansas, Maryland, New Jersey, New York, Massachusetts, and North Carolina , Colombia.
Large value payday loans are permitted by state law or regulation in thirty-two states. Borrowers are protected from expensive payday loans through reasonable limits on low lending rates or other prohibitions in fifteen states. Three other states in the United States have lower cap rates or longer terms for less expensive loans. Online payday lenders generally obey state licensing laws and cap rates in the state in which the borrower obtains the loan.
How to avoid the spiral of wage debt?
We all have financial emergencies and life is on hold. Ultimately, people choose payday loans to offset their budgets. However, unplanned borrowing causes 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 benefit from 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 they can be trusted to pay their 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 better 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 have negative effects as well. Therefore, before you even think about a payday debt, be sure to consider all of 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.
Plus, if you have a high credit score, you can qualify for a credit card with 0% annual interest rate. For this type of card, there is an interest-free promotion period of up to 21 months. If you pay the amount owed before the end of the promotional period, you can avoid the interest. After that, interest will be charged on the remaining balance until it is fully repaid.
Participate in financial assistance programs
Depending on how much you earn, you may be eligible for financial aid programs in your area. Some programs may offer rent assistance while others can help pay for food and other expenses. To find these programs, check with your local library or chamber of commerce.
Sell unnecessary things
Debt and loans for some people are a rather unattractive way to find money in a short time. How to get funds without resorting to loans? To do this, you can start selling your own business. This can be done through special sites or social networks by placing an ad for sale.
The easiest way is to sell things that are no longer in use. Instead of giving them away for free, it’s better to find a buyer for them and earn a certain amount. When you sell on the Internet, you need to analyze what is being demanded. For example, some clothes are only of interest for a particular season. The higher the price, the longer the item can be on sale. So if the money is urgently needed, it is worth adjusting the cost.
One of the options for receiving money in a fairly short period of time is to perform work with a piece-rate payment. It can be an internet job or a small position with minimal employment in a company or office. Some types of jobs are paid by the hour or by the day, which allows you to find money quickly and without a job in the long run.
Working on the Internet allows you to earn money in your spare time from your main job. It could be :
- work as an online consultant;
- perform translations from / into 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.