In short the law states that the cash lenders can offer loans at 36% APR. The lawmakers feel it’s a great deal. The realty is its not. Why? Because 50% (half) of the people who take a loan never pay back. You do the math yourself. If half do not pay back then at 36% APR a loan business cannot survive.

Many people have lost their jobs, but most importantly it’s the people of Montana who have a lot to lose.

Now the only way to take a cash loan is from the credit unions or a bank. We all know how hard it is to get a loan from a credit union or even a bank.

For both the eligibility criteria is very high and often the loan seeker is rejected due to non-fulfillment of eligibility criteria.

One of the worst criteria’s is that the person seeking a loan must earn double per month of what they are seeking. So for example if you want a loan for $1500 – you need to earn $3000 to get a loan. Most of the people who look for such loans earn well below $3000 per month and therefore will not get a loan for $1500.

However, there are companies who are operating online in some other state and may be willing to give you a payday loan even if you are a resident of Montana.

You may try this company to get a payday loan if you are a resident of Montana. They offer a no fax paperless payday loan.

Some even take out a second loan from another borrower to payback the first loan. However it is a bit difficult to get a second payday loan without paying back the first loan. So, a majority payback the first loan and apply soon after for a second payday loan.

A new study by the Center for Responsible Lending has found that the main reason why people seek a second loan is that repayment leaves them with inadequate funds for other needs.

Payday loans require borrowers to sign over their next paycheck in exchange for a cash advance of a few hundred dollars with an interest rate as high as 400 percent.

The report examined the loan activity of the more than 80 percent of borrowers who take out more than one payday loan a year. The borrowers generally opened new loans soon after repaying the old one, with 87 percent of all new loans occurring during the next pay period.

Nearly 59 million loans totaling more than $20 billion fit this pattern, accounting for three-quarters of all payday loan volume, the study found. The loans resulted in $3.5 billion worth of fees each year.

Nova Scotia Utility and Review Board had set a fee cap on payday loans last year – this will come in effect from next month onwards.

Here is the new rule:

Payday lenders in Nova Scotia cannot charge more than $31 per $100 borrowed, which includes all non-optional fees tied to the loan. Default fees cannot exceed $40 per loan; and the interest rate on loans in default cannot exceed 60 per cent annually.

Payday loan rates in Nova Scotia range from about $15 to $35 per $100, according to evidence submitted to the regulatory board.

If this isn’t enough, the rollovers are also banned.

Payday lenders will have to submit annual reports to the province every year.

The Utility and Review Board will also carry out a review of the regulations in 2010.

In 2008 payday lenders in Virginia (VA) approved nearly 3.4 million payday loans, or about 281,000 each month. Now in 2008 by the end of May, lenders had issued only 226,807 loans – an average of 45,000 per month – an 84 percent decline.

This data is by The Bureau of Financial Institutions. They derived the data from a database that began tracking the loans since Jan 2009. The database was required as part of reforms that passed the General Assembly in 2008.

In December 2008, legislators ended three years of debate and passed a law that limited borrowers to one payday loan at a time and extended the length of time (almost doubled) they have to repay it, effectively limiting how many loans they can get each year.

Short term payday loans are available to employees working for at least 3 months. Those who are self employed may not be eligible for a payday loan (maybe because they are not paid). Also unemployed people or people in military are not qualified to get a loan. These loans are a cash advance for the people who are in need of money for an unexpected thing. But this is till the next payday only. This is the reason these loans are given to salaried people whose salary documents are available to the lenders. You have to repay the money when you get your next paycheck – usually a very short term.

Applying for a payday loan is quite simple. There are many websites providing payday loans now. You have to just browse through the Internet to get a complete list of them. After a thorough analysis, you can opt for a moneylender who is good at his terms and conditions. Analyze the service charges of such lenders carefully as they tend to vary widely. Thus taking all the things under consideration, make a decision on which lender to choose. Fill their cash advance application form online. You will have to fill up your details like the address, phone number and employment particulars. The lenders will evaluate your application and will make a decision based on that.

Lenders also check your account status. You must have a valid checking or savings account to get the money you need instantly. Probably it will take only a few hours to get the money into your checking account. This is a very easy task as almost all the processes are done online. After getting your money, plan your expenses and do it properly. The proper expenditure of money can lead to a peaceful and enjoyable life.

Remember that payday loans are costly. They come with high APR. So we urge you to apply a payday loan only if required. If anything other than urgency, you are better off payday loans. However taking a payday loan does not hurt your credit record.

The short term payday loans are restricted by law in many states of USA. Due to the high interest rates, the states intended to keep people away from the hands of these financial lenders. But many a times, these lenders are useful for the people in need of urgent money. So, it is for the people to decide whether to go for a payday loan or not.

Remember that there are no alternatives as of now in America for an easy access of small loans than this. If you require anywhere from $100 to $1500 urgently, short term payday loans are your best bet.

Be it a sudden car repair or filling gas so that you reach office on time, or cash for a medical emergency – payday loans comes in handy.

In other words payday loans are a boon for middle class Americans who are already suffering from the greatest depression of their lives.

Unfortunately and to bring more pain to loan borrowers two congressional bills have been put forward that will, unequivocally, cause all short-term payday lenders to close their doors. The bill is known as “S 500” or “House Bill 500”.

The name of the bills:

1. ’Protecting Consumers from Unreasonable Credit Rates Act of 2009′ – authored by Senator Richard Durban D- IL.
2. “Payday Loan Reform Act” – authored by Luis Gutierrez D-IL.
 
The S 500 bill if introduced will ban most, if not all, short-term credit lending, including everything from payday lending, car title loans and bank overdraft loans. This will not only cut off access to convenient and easy short term cash, but also put more than 50,000 people out of work across USA.

Here is why:

These bills will bring a 36% rate cap on any payday loan. Under a 36% APR cap, for example, the fee on a $100 payday loan would be a mere $1.38, less than $0.10 per day. No lender – not a bank, not a non-profit, not a credit union – can make a profit with such a cap and eventually be out of business leaving millions of Americans nowhere to go for short term cash requirements.

Those who are opposed to these bills can contact their congressional representatives and/or Senators and tell them that this will do no good to the borrower as well as the lenders. Borrows will have nowhere to go for short/small loans and lenders will lose business and their families affected.

You can click here and select the link reading “Urge Your U.S. Senators to Oppose S 500”.

A payday lender asks for $15 to $25 on an average on a $100 loan to be returned in the next payday. Compare this to a bounced check where the penalty is $35 and it also affects the credit rating.

Payday loans may be costly on paper, but in reality they are not! It’s also not that the people who borrow payday loans are not aware of the high APR these loans carry. They borrow because they need money more than anything else during emergency.