Payday Advance California - Payday Advance Credit ™ USA
Payday loans are usually the last resort for most borrowers looking to manage their deteriorating economic condition. Most people use them to handle emergencies and unforeseen expenses. The borrowers often turn a blind eye to certain important facts that must be taken into consideration while applying for these loans. Mentioned below are certain important things that are important for any borrower applying for a payday loan in the state of California.
In order to conduct their business in California, the lenders must have a valid license from the California Department of Business Oversight (DBO). The borrowers should only apply for loans through licensed lenders. When a borrower does business with any unlicensed lenders, whether operating through storefronts or operating online, they won’t be able to benefit from the protections that the state law provides to the borrowers. Some of these protections are limits imposed on the payday loan amounts, the fee that can be charged from the consumer as well as the requirement that the lender must provide all the necessary information pertaining to the loan.
How do these loan work?
Formally referred to as a deferred deposit transaction, in this type of loan the consumer gives the lender (known as an originator according to state law) a personal cheque for the desired amount of money. The lender gives the borrower the money, minus a fee mutually agreed upon. The lender then postpones the deposition of the consumer’s cheque for a specific but a short time period.
The maximum amount for which the borrower has to provide a personal cheque cannot be more than $300. The lender can charge a maximum fee of 15% of the amount mentioned in the consumer’s cheque for providing a payday loan. So you just have to multiply the sum mentioned in your personal cheque by 0.15 in order to get the maximum fee that can be charged for providing you the loan. For instance, if you provide the lender with a 300$ cheque and they are charging you a 15% fee for providing the loan, then the fee for your loan will be approximately $45. This means that you would only be able to borrow $255 against a $300 cheque ($300 minus the $45 fee).
The lenders must inform the borrowers what the loan fee will be in terms of APR – Annual Percentage Rate. For a usual Payday Loan, this annual percentage rate comes to be above 400%. The maximum duration of a payday loan cannot be above 31 days. The lenders have freedom to provide the borrower with time extensions in order to repay the loan and they are not allowed to charge any additional fee for this extension. However the lender is allowed to charge a maximum fee of $15 when the consumer’s cheque is returned by the bank and not honoured.
The information which the lender must provide to the borrower: