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Missouri Payday Loans - A blow by blow interpretation of Missouri payday loans - in layman’s terms

Missouri State Map
Missouri State Map
Through the work of astute legislators, new laws have been enacted in the state of Missouri to govern the business practices and consumer interaction with cash advance services operating within the state. The statutes that legislators have crafted provide regulation and monitoring for the entire industry, and provide protections for citizens to take advantage of the short term financial sources. Below is the layman’s version of legislation that is typically long-winded and a bit long in the tooth; for this interpretation, we have taken out the legal jargon so that the average person can understand the benefits as well as the pitfalls in dealing with Missouri payday loans services.

The information below is a list of excerpts taken directly from the state’s report on the regulations 408.500 - 408.506; while this translation is in keeping with the spirit of the various regulations, it is simply an interpretation for the sake of simplifying the laws for basic understanding. For complete documentation on the state’s laws, you may want to consult the state of Missouri’s website or a local government office. The regulations listed will start at 408.500 .1 and go on from there, with each being simply listed by the last number of the regulation.

Missouri State Flag
Missouri State Flag

  • The first and most important regulation requires that lenders be licensed by the Division of Finance of the state and pay an annual fee of $300 for that licensing. Having cash advance services registered under the state provides a quick reference and methods of keeping a watch over reputable industry operators. This regulation also requires that these lenders adhere to the Truth in Lending laws, and also limits any lending activity to a maximum of $500 per the borrower. In addition this regulation precludes pawnshops and consumer credit lenders from taking part in any cash advance or payday loan activities under the unsecured loan regulation.
  • This regulation establishes clear-cut interest rates and fees for any payday loans made within the state, it also sets a penalty for violators, who would seek to act outside of the governing laws.
  • This portion of the law specifies that Missouri payday loan services must be limited in their collection activities to acting under the auspices of the courts; the house, the collection costs that companies are able to recoup in the event of a defaulted loan are limited to court cost and reasonable attorneys fees - if the court so awards
  • Simply requires that all payday loan lenders must clearly post their maximum annual percentage rates for loans made, along with a clarification that these loans are specifically for short-term use by individual consumers.
  • As is common in many other states with an active cash advance industry, this section requires that the lender make the borrower fully aware that they have the option of canceling a loan within 24 hours of receipt by returning the funds with no penalties or fees.
  • Unlike many states, Missouri does allow renewals of payday loans, however, renewals are limited to six and with each renewal, the borrower must pay down at least 5% of the original loan’s face value. Each of these 5% reductions must take place prior to a loan renewal.
  • Missouri payday loan lenders are required to take into account new borrowers ability to repay a cash advance prior to any loan issuance. Simply put, the lenders have been forced to take responsibility for loan activity that may be harmful to consumers
  • A cash advance service that plans to discontinue operations has to first notify the state so that a detailed examination can be performed at least 10 days before the company shuts down its operations. This allows the state ample time to make sure that the company is winding down its business in a legitimate and legal manner.
  • This regulation provides a special provision for the state to put a halt to any cash advance operations that are suspected of illegal activity; by direction of the state, in Missouri payday loans operator can be immediately shut down pending a formal hearing.

Missouri payday loans
Missouri payday loans
The next section that will be covering deals with the regulations starting with 408.505.1, and continues up to 408.505.5 - providing further details on the functionality and legal limitations of these unsecured lenders

  • This section goes into further detail on the licensing of cash advance services, and highlights penalties for lenders who have engaged in illegal activity and their lending practices, so to avoid certain legal requirements set forth by the state.
  • This regulation is also one of high importance to the consumer, as it sets a minimum and maximum term for any cash advances made within the state; the minimum number of days that can be given to repay a cash advance is 14 days, and the maximum number of days to repay a loan is 31 days.
  • Another important section of the regulation limits the total amount of interest and associated fees that a lender can charge to the borrower to an amount equal to 75% of the face value of the monies initially borrowed; this effectively puts a cap on the amount of damages that a company can recoup from a borrower in the event of a default, stopping the interest and fees from further burying a financially disabled consumer.
  • Provides clarification of terminology as it relates to loans that have been completely repaid as well as loans that have been renewed by the borrower
  • This allows a borrower from repaying a loan with a subsequent loan from the same lender. This regulation restates an earlier regulation that limits the total amount of borrowing - so that a consumer is not endlessly caught in a loop of borrowing to pay off a previous loan.

With but they simplified understanding of these particular regulations as they relate to Missouri payday loans, the average consumer who decides to pursue short-term financing in this manner will find himself a bit more educated in the terminology and in their rights and responsibilities.