Are Payday Loans Legal in Alabama?
Short-term Payday Loans are legal in the state of Alabama and are mostly regulated through Ala. Code §§ 5-18A-1 et seq.. The Payday Lending legislation covers all the parts of the process concerning:
- Payday Loan amounts
- Payday Loan repayment terms
- Payday Loan online direct lenders
- Payday Loan stores near you
- Payday Loan interest rates and other fees
- Payday Loan collecting practices
- Payday Loan default penalties
- The number of outstanding Payday Loans as well as a cooling-off period in-between etc.
To see if you’re eligible for a Payday Loan in Alabama check out the lenders’ requirements:
- Steady income
- At least 19 years old
- US residence
- an active bank account
- a valid phone number, or e-mail
Alabama allows maximum 31 day(s) Payday Loan amount. It should be repaid within 10-31 days as you get your next paycheck. Earlier payments don’t contemplate any additional fees. The maximum charge for a 14-day $100 loan cannot exceed $17.50. taking into account the average APR of 300.00%. For other details read further to find out how many Payday Loans you can borrow, whether rollovers or extensions are allowed, etc.
Alabama Payday Loan Terms and Amounts
Alabama residents who are eligible for a Payday Loan can get $500 cash advance per contract and have no more than 1.00 outstanding loans at a time. The repayment term is capped by minimum 10 day(s) and maximum 31 day(s).
However, there are no limits on the purpose of loan usage. Any urgent expenses, unforeseen bills, car repair, home repair, etc. may seem a sound reason to apply for a Payday Loan in Alabama.
If $500 is not enough, there are always other options to receive the necessary funds in Alabama:
- unsecured Installment Loans,
- bad credit Personal Loans,
- Title Loans,
- Check Cashing,
- Pawn Shops, etc.
Alabama Payday Loans online laws
Cash advances (payday loans) from both storefront and online lenders are legal in the state of Alabama pursuant to the The State Banking Department Bureau of Loans, P.O. Box 4600 Montgomery AL 36103. Tel. (334) 242-3452, specifically provided for in Alabama Sec. 5-18A-1. Reputable online lenders operating in accordance with all relevant state and federal laws can be applied to and compared on our platform using a simple online application form.
You state the necessary amount, fill in your personal information and get suitable offers from legit direct lenders. It takes only a few minutes and doesn’t affect your credit score.
Alabama Payday Loans interest rates, fees, and other finance charges
The main part of payday loan payment is mostly made up of the interest rate, or APR. The average APR that may be charged for short-term cash advance in Alabama is 300.00%. It means that if you borrow $100 Payday Laon for 14 days the finance charges will be 17.5% of the amount advanced.
Besides, the total cost of a Payday Loan includes some additional fees. Alabama lending rules allow charging:
- One $30 NSF fee;
- Court Costs;
- Reasonable Attorney’s Fees up to 15% of face amount of check
The law obligates Alabama Payday Loan lenders to provide you with a written disclosure of all the rates and fees in understandable language. You should read them carefully and if you agree acknowledge the notification by signing the contract.
Alabama Payday Loans direct lenders regulations
According to Alabama payday loan laws all direct lenders are obliged to register their companies which will allow issuing payday loans contract. It concerns both Online Payday Loans and Payday Loans Near Me.
The main rules regarding Payday loan lenders in Alabama are:
- Essential state license.
- Complete disclosure of all the information concerning the loan such as its repayment terms, rates, fees, etc.
- Besides, Alabama direct lending companies are recommended to educate the customers on the possible issues related to payday loans. Borrowers must be aware of possible risks, default penalties, other consequences of short-term loans and their alternatives.
- Alabama laws prohibit offensive collecting practices connected with the due loans. Criminal action threats are banned and the lender is required to send a mail notification before starting any legal proceedings against expired contracts.
Nevertheless, you should be careful not to come across any scams. Some unfair lenders can operate without license or under a different license and offer too expensive ‘payday loans’ under illegal conditions. Always check that the lender you are going to apply to works under Alabama state law.
Alabama Payday Loans consumer information
Besides amounts, rates, and fees, consumers must be also well aware of other details of Payday Loans in Alabama. They include the availability and number of rollovers, extensions and repayment plans, a cooling-off period, any default penalties or additional fees, etc. Check out the table below to find the most essential information:
Rollovers or extensions – 1 rollover or repayment plan
Cooling-off period – 1 business day
NSF fee – $30
Other default penalties – 3% a month from the default date
Criminal actions – Prohibited
Look for more detailed information on the official Alabama state regulator website – http://www.banking.alabama.gov.
Legitimate Payday Loans Online with NO credit check in Alabama
Looking for a legal Payday Loan with No credit check in Alabama? You must understand the meaning of this phrase correctly at first. No credit check implies that a lender will not inquire about your credit history information from or send your borrowing data to any of the three major credit bureaus Equifax, Experian, and TransUnion.
If you don’t want to damage your credit history Alabama law allows you to apply for a Payday Loan with No credit check. But you should understand that a lender needs to check your creditworthiness at least in some way. He can perform a soft credit check when a lender pre-approves you for a loan and this inquiry will not appear on your credit report. Or there’re other ways to prove you can afford the cash advance. Payday Loan lenders use the tracking system to verify your debts, check your income, etc. And generally, they charge higher interest to lessen the risks.
Alabama Payday loans online with no credit check are one of the easiest options for getting quick cash to cope with emergency financial requirements, especially for people with poor credit.
Does Alabama law allow Payday Loans for bad credit borrowers?
The average credit score in Alabama is 660, placing it in the fair range. But it doesn’t mean that those who have worse credit can’t apply for a Payday Loan in Alabama.
First of all, There’re a lot of legit direct lenders in Alabama providing Payday cash advances to borrowers with both good and bad credit scores.
Secondly, you can always find a cosigner to increase your chances of being approved for a bad credit Payday Loan.
Find out how to improve your credit score and do your best to do it fast.
Or consider taking out bad credit Installment Loans, or bad credit Personal Loans.
Legit Payday Loans in Alabama collection practices
If you can’t repay the loan amount plus interest on a due date it means you defaulted on the loan. When Alabama direct lender isn’t able to cash your check after the repayment term is over he may charge you an NSF fee. NSF fee means there are non-sufficient funds in your account. The amount charged is determined by the lender and stated in the agreement and may also be limited by the state’s Payday Loan law. In Alabama, it’s $30.
Besides, there are other default penalties in Alabama such as 3% a month from the default date.
What concerns collection practices, first of all, you may stay assured that any criminal actions are forbidden in Alabama. If the lender is going to refer to the court or perform any other collection measures, he must notify you in writing at first. If you don’t respond within 15 days, a lawsuit against you may be filed. It may lead to 3% a month from the default date.
If you think that your payday lender violates the Alabama Payday Loans law, you may file a written complaint with The State Banking Department Bureau of Loans, P.O. Box 4600 Montgomery AL 36103. Tel. (334) 242-3452. The supervisor from that office interviews witnesses reviews the payday lender’s business records and documentation, and determines whether to pursue civil or criminal charges
Alabama Payday Loans news – latest changes
The latest attempt to impose changes on Payday Loan lenders was made in February 2019. Alabama lawmakers from both parties and advocacy groups spoke today in support of a bill to give payday loan customers more time to pay off loans, a change they said would help protect financially fragile borrowers from spirals of debt.
The bill would set the minimum term at 30 days, effectively reducing the maximum APR by more than half. But it would also reduce profits for lenders by about 20% to 25% and some payday loan stores would close and customers would turn to online lenders. So, the bill to extend payday loan terms to 30 days passed the Senate last year but failed to win committee approval in the House.
The latest report on Alabama Payday Loans highlights.pdf
Under state law, payday lenders can charge up to 456 percent APR.
More than 1.7 million payday loans were taken out in Alabama in 2018. Averaged out, that’s more than 32,000 payday loans per week.
More than 200,000 Alabamians take out a payday loan every year.
Every year, Alabama borrowers pay more than $100 million in payday loan fees that do not decrease the principal amount owed.
About 85 percent of payday loan borrowers in Alabama take out multiple loans in a year.
16 states and the District of Columbia have passed APR rate caps that keep payday lenders out, meaning that 95 million Americans live in communities without payday lending. Follow-up studies have shown that access to credit was not significantly impacted for former payday borrowers in these states, who have turned to other means of credit at a lower cost.
More than half of Alabamians support banning payday lending (52.5 percent).
73.6 percent of Alabamians support a 36 percent APR cap on payday loans.
74.1 percent of Alabamians support extending payday loan terms to 30 days.
Alabama Payday Loans historical background
1994
Payday loans now could be also covered by the Alabama Small Loan Act, the Mini-Code, and became the subject to Truth-in-Lending Disclosure.
1998
The “Alabama State Banking Department unseccessfully issued 150 cease and desist orders” to lenders violating the interest rate cap.
2002
An alternative rate schedule and increase of the allowable loans to the average 190% APR was set by lenders.
2003
The APR at 456% was set by the Deferred Presentment Act.
2013
The Alabama State Banking Department designed the database system to prevent lenders from over-lending which led to their claim for defence.
June 2, 2016
A Payday Loan Rule was offered by the CFPB.
2018
SB 138. which was supposed to set 30 Days repayment plan passed the Senate but was rejected bythe House Financial Services committee.
February 20, 2019
Alabama state senator Arthur Orr has brought legislation in Montgomery designed to curb predatory Alabama payday loans. The bill would limit interest rates on payday loans in Alabama and allow borrowers a 30-day repayment term.