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Top 3 States with the Lowest Payday Loan Rates
Due to their popularity amongst consumers,
many states have imposed laws for payday loans. The reason behind this is that payday loans come with a high-interest rate that can reach up to a 500% annual percentage rate (APR).
If there are states that do not enforce a limit on the payday loan rate, there are also those who took the initiative and set a rule governing it. If you live in the following states, consider yourself lucky as these are the top three states with the lowest payday loan rate.
The State of Colorado
The first state with the lowest payday loan rate in the US is Colorado. Many years ago, the state of Colorado allowed payday lenders to impose up to 129% annual percentage rate (APR) on their payday loan products.
Although this percentage is already considered high compared to other
loan alternatives, it's the lowest available per annum rate for payday loans in the United States.
However, the payday loan interest rate in the state was capped at a 36% annual percentage rate (APR) when proposition 111 was approved in 2018. This proposition covers 17 states in the country.
The proposition also required that payday loans have a minimum repayment term of six months. The new law governing the payday loan in Colorado puts payday lenders at risk of closing their business completely in the future.
Colorado State Law on Payday Loan
Aside from the provision about the minimum repayment term of payday loans and the interest rate cap, the law also states that payday lenders should limit how much a borrower can loan. If you are in Colorado and planning to acquire a payday loan, you can only get a maximum of $500 at once.
For instance, if you have already loaned an amount of $300 from one lender, you cannot acquire an additional $300 from the same or another lender. The payday loan of Colorado also forbids lenders to take legal actions when the borrower fails to pay the loan on time unless the borrower closed their checking account before paying the loan in full.
The State of Montana
One of the 17 states in the country under proposition 111 is the state of Montana. Like Colorado, Montana's payday loan rates in the past were high. But despite the higher rate, the industry flourished.
Due to the latest provision, the State of Montana capped the payday loan interest rate at a 36% annual percentage rate (APR). The capping covers all, including
online payday lenders. This legislation was created to protect consumers who are deeply in need of instant cash.
Montana Payday Loan Law
The maximum amount allowed for a payday loan in Montana is $300, and the minimum is $50. It's less expensive compared to Colorado.
The maximum term for this loan in Montana is a maximum of 31 days. Rollovers, including renewals, extensions, and refinancing of payday loans, are also not allowed. Lenders cannot offer another loan to the borrower to repay the previous one.
The State of Nebraska
The third state to allow payday loans at a low rate to consumers in the Us is Nebraska. It's also one of the 17 states that imposed capping on payday loan interest rates.
The state only allows lenders who impose an interest rate of 36% per annum for payday loans. Lenders who charge more than that can be reported to the authorities.
Borrowers in Nebraska can acquire a payday loan either online or store-front without any worries. You could rest assured that the law governing a payday loan will still cover you even if you acquired your loan from an online lender.
Nebraska Law for Payday Loan
In Nebraska, you will find many payday lenders. Nebraskan payday lenders are also available online, which makes it convenient for consumers to apply, especially during a pandemic.
You can borrow as much as $500 under a 34 days loan term. It's prohibited to refinance a loan and acquire more than two loans from one lender simultaneously, especially if the two loans are over the allowed maximum amount of the state.
All three mentioned states are under the new provision that governs payday loans. If you are a resident of these states, you are lucky because you have the privilege to acquire this loan at a lower rate in case of an emergency. If you do not reside in these states, you can check your state's law for payday loans.