California Follows Arkansas in Online Payday Loans
Last month, Arkansas outlawed an online payday loan lender who was in charge of several online companies. According to the news reported on September 4, 2012, California State outlawed at least nine online payday loan lenders due to the exorbitant interest rate and its overly aggressive behavior in collecting debts.
Are payday loans illegal in the state of California? No, actually they are not. Payday loans are allowed to conduct in this state, only if some regulations are observed.
The maximum payday loan amount that you can get in California is $300 and you have up to 31 days to prepare the repayment before the due date. The APR for a 14-day loan of $100 should be 459% or less. That’s to say you will be charged $17.65 on every 100 bucks you owe.
However, the news reveals that one of the online payday loan companies, which is called TIOR Capital LLC, charges an insanely high finance fee on its clients. By taking a $300 payday loan with a 14-day term, you should fork over $90 as finance fee. Yet in compliance with the state regulation, you have to pay just $52.95 for a $300 payday loan. There is $37.05 that crosses the regulated line.
And what’s worse, when you fail to pay back the loan on time, your loan is just refinanced for another fee of $90 automatically. Consequently, the APR allegedly can reach as high as 782.14%, which is 323% higher than the maximum figure.