Payday loans in georgia
More than 10000 payday loan centers across United States, payday loan industry is a multibillion enterprise.
Payday loans are short term loans that are provided to a person up to his payday and attract very high interest rates. A person is generally required to provide a copy of salary stub, identification proof and bank statement for getting loan amount. The loan amount is generally credited directly into the account of the borrower. Almost all the lenders do not make any credit check and this is the reason why these loans are so popular. People suffering from bad credit are able to fulfill their requirements easily by way of these loans. The interest rate in APR terms can go up to 390%, as person is required to pay from $15-30 for every $100 borrowed for a period of 14 days.
In present times, there are very strict laws pertaining to payday loans in Georgia. Payday lending by any unlicensed institution has been rendered illegal. As per the Truth in Lending Act, all the payday loan lenders in the state of Georgia are required to provide the cost of credit to the borrower, before providing the loan amount. A person has got all the rights to get the finance charge and APR in writing from the payday loan lender. In the state of Georgia, as per the Usury laws, any unlicensed lender cannot charge more than 8% of loan. Thus, unlicensed loan lenders are not able to provide high interest rates payday loans in Georgia.
With respect to payday loans in Georgia State, it is very important to discuss the act passed in the year 2004 regarding payday loans. As per the act passed on 15th April, any unlicensed payday loan lending has been made punishable and a person can get imprisonment up to 25 years also. The maximum fine associated with such lending is $25000. As per the new law passed, all loans amounting to $3000 or less are prohibited, if they violate usury laws pertaining to the state of Georgia. The APR or annual percentage rate on payday lending has been capped at 16%. Under the act, if any lender charges more interest on payday loans, the borrower can easily sue it for 3 times the total loan amount plus interest charges as well as fee towards court and attorneys. Class actions that are taken against various offending payday lending institutions have been authorized.
All the payday loan lenders were declared as public nuisance and all the illegal payday loans have been declared void. In violating cases, penalty equal to 50% of the proceeds has been imposed. No payday lenders are permitted to get certificates for carrying out businesses in the state from Secretary of State or Department of Banking and Finance. Military personnel and their families that suffered badly due to payday loans in the state have been given adequate protection. If any non-bank lender partners with any out of state bank in Georgia so as to avoid the usury limits, it would be rendered illegal.
Similarly, all the payday loan lenders have been prohibited from contacting the Commanding Officer of the military personnel for the purpose of recovery. The bill passed is called as the Payday Lending Act of 2004 and all the payday loans made without license are rendered illegal in the Georgia. All the victims of payday loans in Georgia can report the matter to Office of Commissioner of Insurance, Industrial Loan Divisions. It can easily be called at 404-656-2078. The Governors Office of Consumer Affairs does not handle the complaints of victim any more.
RELATED ASPECTS
From the above discussion, it is quite clear that if any non-bank or in-state bank adopts payday loan lending in the state of Georgia, stiff penalties would be imposed as per the act of 2004. It is not that no efforts were made by the payday loan lenders to save their positions or declare the above law unconstitutional. Many payday lenders along with their bank partners demanded for a court ruling, but all efforts failed. Now the question arises here why such an act was needed? This is because people in the state of Georgia were suffering badly from payday loans. Most of the payday loans in the state carried a finance fee of $15 per every $100. In APR terms, it came to be 360%. The repayment period allowed as 14 days.
In most of cases, as per the survey conducted by various organizations, borrowers were not able to repay the loan in time and instead, they made practice of taking another payday loan for repaying the previous one. This made the situation grimmer. They were getting more and more deep rooted in payday loans. People who had fixed small income like military personnel, minorities and single mothers etc were suffered the most. These obtained payday loans from different lenders so as to find quick solutions for their finance problems. Since payday lenders use to provide these loans in quite hassle free manner, these loans gained much popularity among such people. Illiteracy and ignorance also helped payday loan lenders to provide loans to large number of people. Just think, any person who was able to give salary stub and post-dated check was provided with the loan amount. People who were suffering from bad credit found this way of arranging money very convenient, without giving a thought to the repayment or interest rate. This resulted in their credit score becoming worse.
NEW PAYDAY LOAN LAW
As per the new payday loan law enacted on 22nd February, 07, payday loan lenders are allowed to resume short term lending. But a cap on finance fee has been placed at $15 per $100 lent, but loans would not accrue any interest. However, payday loan lenders have been allowed to charge a one time processing fee. The maximum fee that can be charged on a loan of $750 is $112.50. As per the new law, payday loans cannot be rolled over from one month to next month.
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