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