Arkansas Payday Loans - What you need to know about Arkansas payday loans

For citizens all around the country, taking advantage of access to short-term funds has become a common place method for bridging the gap between paychecks. In a society where the majority of its citizens are forced to live from check to check, it is not unusual for shortfalls to occur between those pay periods; it simply takes a slight miscalculation in terms of deals, or an unexpected expense arising out of emergency or convenience, and suddenly we find ourselves lacking the financial resources to carry us through to the next payday. With the advent of cash advance services, we've been able to gain somewhat of a friend with deep pockets. For the majority of us, who do not have sterling credit or a group of wealthy friends or relatives, cash advance services are invaluable.

Many states around the country have not only legalized, but legitimized the cash advance industry through regulation and legal applications; what was once a rogue business model has now become a viable industry across our country and around the world. In the state of Arkansas, Ark. Code. Ann. § 23-52-101 et seq. sets forth guidelines for the proper conduct of an Arkansas payday loans business. These guidelines dictate that a payday loan lender in the state has to adhere to very direct stipulations in terms of how old they conduct their day-to-day lending operations.

Some of the most important parts of this legal legislation are the lending terms, as discussed below:

Maximum allowed Arkansas payday loans - the most that a consumer can borrow from a cash advance service in the state of Arkansas is $400. This limit was set by legislators as somewhat of a safety point for the average consumer; considering that $400 is roughly half of the average two-week paycheck for someone who is working near the minimum wage, this is considered a number that can be repaid on time by just about anyone. If a person makes roughly $800 - $1000 per pay period, and they are not borrowing for frivolous reasons, it is assumed that they would be borrowing the funds to pay off a normal expense that might come at an unusual time, and this would be an expense that would normally have come out of that next paycheck. If a consumer is borrowing simply to pay a bill that was already in their budget but just not in their timing, then it would be reasonably simple to repay the loan + appropriate fees from that next paycheck.

Minimum and maximum term lengths for Arkansas payday loans - in order to make sure that a consumer has sufficient time to repay a cash advance, the state of Arkansas has instituted minimum and maximum terms for cash advance loans to be repaid. The minimum timeframe allows for repayment in six days - from the time of the funds being transmitted to the borrower. This takes into account that a borrower is requesting funds midway through a two week pay period, and the funds are being transferred at the beginning of the second week; nationally, this is the point where most consumers, who are living from check to check, find themselves in a financial bind of one form or another. Typically this the midway point between checks is when things start to get a little stretched financially. The six day minimum fits into that low point and finances, and simultaneously, the six day minimum requirement also stops the consumer from borrowing, and the lender from lending for one or two days at what would be considered pricey rates for such a short term. The maximum length that a consumer can take out an Arkansas payday loan for, on the other hand, is 31 days; this rule takes into account the nature of some consumer's income - realizing that not everyone is paid on a one or two week schedule, the state took into account that at some point consumers on fixed incomes may need to take advantage of this form of emergency cash as well. By setting the maximum term length at 31 days, the state of Arkansas has also given the consumer a little bit of leeway when it comes to repayment of the average two week loan. With the ability to request up to 31 days to repay a cash advance, consumers can effectively decrease any inconvenience connected to repaying a loan in such a short time.

Maximum charges or Arkansas payday loans - the annual percentage rate or a cash advance in the state of Arkansas is 579%, this may sound like an extremely expensive undertaking but to better understand the real math behind this percentage, one has to realize that first and foremost, a cash advance is not a year-long loan. The APR is calculated on the basis of 12 months, but this is a very misleading number, simply because a cash advance is more a maximum of 31 days in the state of Arkansas. What is more accurate is the fact that the maximum finance charge per $100 for Arkansas payday loans is $22.22 - this actually reflects an interest rate of 22.22% for 14 days - it is not annualized or compounded, it is a flat $22.22 for every $100 that a consumer borrows. If you were tomorrow $200 until your next paycheck, at the time that the loan is due and payable, you would owe $244.44. The annual APR would have you to believe that you are paying 579% on those funds, but again those numbers are for 12 month loans. The truth remains that you are only paying a 22.22% finance charge, along with any other fees applicable to the loan - and of course these fees, by law have to be disclosed, in full, prior to any cash actually changing hands at the initiation of the loan. If you're considering taking advantage of this financial resources, be sure to get every term in writing up front - this will protect you from any hidden fees and costs, and will show you the true numbers attached to your loan.