Instant Cash Advance Connecticut
Instant Advance Cash Loans Online Connecticut
Connecticut Laws and Regulations on instant cash advance connecticut loans
Payday loans are popular in the US nowadays. With the loan’s minimal requirements and the country’s unstable economy, it is not surprising that many people are availing this type of loan. Moreover, it is fast, convenient and there’s no need for any form of collateral.
Unlike other conventional forms of loans, the payday loan process is simple and easy to understand. There are many financial institutions which offer them and most of them are already available on the Internet.
The borrower will just have to fill-up an online application form which asks for some personal, employment and banking details. These said data will help the lender decide whether or not to approve the loan application.
Once the payday loan is approved, a post-dated check is signed by the borrower which states the amount of cash borrowed with the imposed fee as well. The whole procedure may take a day to process but longer if it’s the first time a person has transacted with the financier.
The loan period lasts only for several weeks and once the customer’s pay check is deposited into his or her personal bank account, the lender then deposits the post-dated check and gets the loaned money back with the interest rate. This is sometimes referred to as the deferred deposit.
There are many legal payday loans in many states but there are certain states which prohibit them. One of which is the state of Connecticut. The Connecticut payday loans do not hold a legal status as a lending establishment as stated by the Connecticut General Status 36a-563. Payday loans allow a person to borrow a few hundred dollars, and in some cases, up to two-thousand dollars.
However, the interest rate is very much higher as compared to other small loans even if a person pays on time. Moreover, if a borrower decides to renew their loan, he or she may have to pay as much as 400% to 700% interest rate. But the state’s usury limit for institutions, which are not banks or otherwise granted exemption, is 12% a year. The strict limit by the law may be because of the many horror stories experienced by the consumers wherein they are left with more debt after they have availed a payday loan.
If however, non-bank lenders wish to acquire an interest rate higher than the allowed 12% for their small loans, then they are required to acquire the necessary license consistent with Connecticut’s small loan law. Additionally, when granted authorization to operate, the lender may ask a rate higher than 12% but it shouldn’t get any higher than the rate usually allotted by the payday loans. The state also considers the add-on interest included in the loans. Thus, for people who wish to avail a small loan, the government instead encourages them to go to banks, pawnbrokers or credit unions.
But the Connecticut small loan law does not only put a limitation of 12% usury limit annually, it also prohibits the “wage assignment.” Assignment of wages is defined as the voluntary transfer of debtor’s pay check in advance to pay for a certain debt. Although payday loans have no “formal assignment” of the wages, many still believe that this is what’s really happening when the loan is g ranted as there’s that expectation that the next pay slip will be deposited to the lender’s account.
The main target of this deferred deposit loan is for the low-income population who are struggling to meet all their monetary obligations in between their payslips. It is also useful for people who have bad credit histories because no credit background is performed in order to eligible for a payday loan. But the laws imposing to prohibit payday loan is to protect the residents of Connecticut from high usury and scams offered by some lenders. As a result, payday lenders find it challenging to infiltrate this state.
Though the residents of Connecticut understand the laws imposed by the state is mainly for their own good, they are left wondering what institution or solutions they have available when they are already faced with urgent bills and emergency expenses. According to financial experts, there are alternative solutions for someone who’s already strapped for cash and is still weeks away from the next pay check.
The first suggested alternative is the borrow cash from credit union loans. This institution belongs to the list of several credit providers which the state of Connecticut does not require a small loan lender licensing.
There are many local cooperatives which provide small, short-term loans to all their members. The union’s loan approval rate is high and quick especially if it is intended for emergency use. But the best part when getting a small loan from credit unions is its low interest rate which may have a maximum of 16% annually.
Majority of these unions even give free financial counselling and help all interested members to come up with financial plan with the hopes that they get back on their feet one day and there’s no need to resort to lending anymore.
If a person is not a member of any credit union, then perhaps he or she could take advantage of the cash advances granted by some credit card companies. Although it may cost the borrower about 30% annual percentage rate and it may impose a cash advance fee, it is still a much cheaper alternative than the payday loan.
But if a certain person is still not eligible for the two mentioned alternatives, then perhaps he or she could take advantage of small consumer loans from consumer finance companies. They also offer small, short-term loans but with a higher interest rate.
The annual rate may be between 25%-36% however it’s still a better offer than what the payday loans ask. For instance, a lender could borrow \$1000 from these companies for a year but still they pay back less than approximately \$300 as compared to payday loan.
Connecticut is one of the 17 states which prohibit payday loan operations. It may be due to the unreasonable rates attached to these loans or the financial risk the consumers face every time they borrow cash.
But whichever purpose they may have, one can be certain that both of these are focused on securing and safeguarding the welfare of their residents from businesses which only aim profits and nothing else.