Payday Loans' Law - Everything You Need to Know

According to payday loans law, payday lending is legal in 27 states, with 9 others allowing some form of short-term storefront lending with restrictions. The remaining 14 and the District of Columbia forbid the practice.

The initiative to amend the Banking Act and the Law on Non-Bank Lending Organizations, which aims to increase consumer protection for loans, was supported in the first reading by 82 prime ministers in 2021.

The author of the project is the president of the Committee for a Responsible Federal Budget, Maya MacGuineas. She claims that about 45,000,000 people have loans from non-bank lending organizations (NCOs).

"When a person has unexpected expenses, he can easily fall prey to fraud, and a debt of 10 thousand dollars can turn into one of 100 thousand and this is because sometimes interest rates reach 1700 percent annually," said MacGuineas. At this stage, people who need money should take care while borrowing high-risk personal loans, which could affect their credit scores and payment histories.

The project approved aims to cap the credit interest rate specified in the credit agreement at a maximum of 50%. At the same time, other expenses (commissions, fees, penalties, interest on arrears, and any other type of payment) that are included in the total cost of the loan, excluding interest, per credit day, will not exceed 0.04 percent. of the total loan amount. Therefore, the total cost of the loan will not exceed its total value.