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Louisiana Payday Loans - Louisiana offers guide on payday lending to show consumers best practices

Louisiana State Map
Louisiana State Map
As payday loans have become more and more popular across the country, more states are beginning to recognize the value that these types of loans carry when it comes to the citizens of their individual states. Cash advances, or deferment presentments as they are sometimes called, are developing into a full-fledged industry designed to cater to the needs of consumers who have in most cases, one out of options for emergency cash. Contrary to popular belief, these are not poor, destitute minority citizens living on the fringe, but they are our neighbors and our coworkers. Anyone who was ever found themselves needing a few extra dollars between pay periods knows what it feels like to be only days away from that next paycheck, but have an immediate need for cash right this moment. This is when we typically will turn to a friend or loved one to borrow just a few bucks to get us through, but what happens when that friend or loved one is also trying to find a way to make ends meet between paychecks. An old standby has always been the use of pawn shops, but we all well know the possible costs associated with dealing with honing some of our most precious possessions; pawn shops have absolutely no qualms with selling off those hard-earned assets in order to make up for that $10 or $20 that you borrowed for just a week or two. So now comes the opportunity to get cash in hand without risking giving up any collateral or property. The state of Louisiana is one of many states in the US that have legislated rules and regulations governing the growing payday loans industry.

Louisiana statute 9:3578.1 et seq. (and subsequent revisions - as of August 15, 2010) were established to set up the parameters under which Louisiana payday loans services could operate within the state. The statute sets specific guidelines for consumer cash advances, and provides certain protections for consumers. Below are some of the major points provided in the legislation, the laws are a bit more extensive and detailed than what is reflected here, but this is simply a primer to give the consumer some important tips on their rights when it comes to borrowing money via cash advance. Some of the highlights include:

Louisiana State Flag
Louisiana State Flag

The statute establishes a maximum loan amount of $350 for anyone customer of a cash advance service-meaning that, no matter how much the consumer may kick and scream, and request higher amounts, the lender can legally provide no more than the set limit. This limit was set to protect the consumer, in some cases from themselves; with a reasonable amount being set as the limit, the likelihood that the consumer will borrow themselves into a deep hole is dramatically lessened.

The statute establishes maximum interest rates and fees that can be attached to any one loan-with any loan, the consumer will face interest fees of no greater than 20% of the face amount of the loan or $55 (whichever is greater), along with a documentation fee of ten dollars.

The statute, in addition to setting the basic interest rate for the loan itself, also since the interest rate that a Louisiana payday loans company can charge the consumer in the event of any default; during the first 12 months of default the cash advance service may only charge up to 36% interest per year, and in the event of further default, the lender can only charge up to 18% per year beyond the first 12 months. Although most consumers are likely to pay on time, or at least in a reasonable amount of time; these extra protections were put into place to cover extraordinary circumstances. Consumers who found themselves in the unfortunate position of the faulting on a loan, would not have to suffer severe consequences as a result.

The statute also provides collection guidelines for the lenders, in the event of an unfortunate default by the consumer; the statute entitles the lender to charge only one no sufficient funds fee in the event of a clients check not clearing; with a fee being the greater of $25 or 5% of the face amount of the check written by the consumer. Notably, the laws of Louisiana also take into account partial payment plans that can be worked out between the borrower and lender; with a partial payment plan, the borrower must make a minimum payment of 25% of the loan (plus any fees) and then refinance the remaining 75% of the balance of the loan - with the appropriate fees attached. Statute also allows for reasonable court costs and attorneys fees, should the lender be forced to pursue restitution through the legal system. Also notable is that the state of Louisiana does not allow the lender to pursue criminal actions for Louisiana payday loan companies who are pursuing the repayment of funds from a client.

Louisiana payday loans
Louisiana payday loans
With these laws being part of the makeup that governs Louisiana payday loans, the consumer is well protected, but also advised to be financially responsible as they enter into any type of loan agreement. The state of Louisiana and acted these laws and issued the information to the citizens of the state so that they would be educated as the sought out emergency funding for a variety of reasons. As one of many states that has enacted laws to govern the cash advance industry, Louisiana has shown that they realize the inherent value in a source of funds that allows easy access with limited requirements; consumers are not subjected to certain credit requirements and credit screening, they are enabled to borrow simply based on their ongoing income. If an applicant can prove that they have sufficient income to repay a loan, and they can provide proof of a valid checking account; they are able to borrow immediate cash in accordance with the laws of the state. Most people who are working, are easily verifiable, and can quickly obtain a cash advance in as little as 24 hours, knowing that the law is firmly on their side as long as they adhere to the preset terms. If you should find yourself in a position of needing emergency cash, you would do well to know the law and know your rights. Again, the information stated above is simply a primer, but not the entire long version of the law; for full details on the laws, contact the Office of Financial Institutions.