Payday loans are becoming a fast and easy way to get your hands on quick cash. As the industry grows, regulations are being set to govern the practice. These regulations vary state to state but most are designed in regard to the high interest rates and fees lenders are prone to impose on borrowers.
The process for payday loans is significantly less stringent than typical bank loans. The most important criteria will be age, certification of employment and a checking account. The ease and potential for approval makes these loans an exceptional opportunity for people in need of funds for anything from paying overdue bills to getting the transmission fixed.
Payday loans have two distinct advantages: (i) unlike traditional loans, which have an approval process that can take weeks or months, payday loans are approved immediately with borrowers receiving cash within hours, and (ii) payday loans are available to consumers with less than stellar credit. The entire application process can be done online or over the telephone in minutes.
Not surprisingly, with the proliferation of companies offering payday loans has come less than exemplary practices that hurt both the consumer and reputable lenders. Kentucky has joined the many states that have introduced legislation to regulate payday loans in hopes of protecting consumers and lenders.
Under the new legislature, consumers may take out only two payday loans in any given two week period. That loan amount cannot exceed $500. On the lender side, payday lenders can only charge consumers a $15 fee for every $100 borrowed.
It has also been established that Kentucky payday lenders that operate online should avoid providing loans to Kentucky residents if the lenders have no local office in the state. This is because these lenders are not licensed by the state to lend money in Kentucky. Technically, without the protection of a license, lenders have no shield should borrowers revoke permission for the automatic payments needed to repay the loan.
So while payday loans are still a great opportunity for fast cash, in the state of Kentucky residents and online lenders have to take care to stay within the boundaries of state law.