Sometimes people experience mid-month financial crises that cannot wait until the next pay check to be resolved. Or they may experience a temporary hitch in cash flow, requiring a quick injection of cash. This is where payday loans come in.
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Payday loans are a type of lending advanced using the borrower’s next pay check as collateral. They are easier to access than loans from traditional lending institutions. They also do not require extensive information from the borrower, or even a history of good credit. However, they are subject to extremely high-interest rates and short repayment periods.
Payday Loans Near Me Toledo Ohio – Statutory Regulations
Payday loans are legal in Toledo and regulated by a piece of Ohio state law known as the Short-Term Lender Law or STLA. Passed in 2008, STLA is one of the best such laws law with regards to consumer protection.
In Toledo, Ohio, the maximum amount of payday loans has been capped at 500 dollars. Further, lenders cannot award payday loans over the mail, phone or online channels: they can only give to borrowers who visit their physical offices.
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Further, state law caps the interest rate payday loans can attract to 28 percent. The amount to be related to the lender cannot be more than 25 percent of the borrower’s gross monthly income.
Other STLA provisions designed to protect consumers include:
- The loan repayment period cannot be less than 31 days.
- A borrower is limited in the number of loans they can take within a defined period of time.
- Criminal action while collecting overdue loans are prohibited.
- Lenders issuing payday loans must be registered in Ohio as short-term lenders.
Despite all these regulations, lenders have found ways to manipulate the system. For example, they bypass the interest rate capping by adding obscure additional fees, such as Credit Service Organization fees, to the loan amount. Potential borrowers are advised to read through all agreements prior to signing to protect them from such predatory practices.
A standard loan agreement should clearly define:
- The actual amount of the loan the borrower will receive.
- The interest rate that the loan will attract.
- The total amount to be repaid to the lender at the end of the loan period.
Payday Loans Near Me Ohio in Practice
Applying for and receiving a payday loan in Toledo, Ohio is a relatively simple process. The lender will require potential borrowers to provide the following documents and information:
- Although it is not necessary to be employed, the borrower must show proof of a steady and continuous income.
- The borrower must have proof if US citizenship and residence in the state that the payday loan is applied from.
- A valid Social Security Number.
- Proof of an active checking account, phone number, and email address.
Once the application for a payday advance is submitted, it is reviewed by the lender or lender network. If it passes scrutiny, the borrower may receive the funds within between 5 minutes and 24 hours.
Most lenders also provide an option to back out of the agreement if a borrower changes their mind. Within 72 hours of receiving the amount, a borrower can withdraw from the agreement and pay back the principle amount without being subjected to any additional fees.
Payday loans are a convenient way to deal with mid-month cash shortages. If one is ready to deal with the high-interest rates, payday loans Toledo, Ohio are a great way of dealing with such situations. However, they are not meant to be a form of income; this will quickly become un-affordable and unsustainable for the borrower.