Payday Loans in Alabama Could Soon be Much Tougher to Get

payday loanPayday loans are an option that allows consumers to get fast cash before they get their paycheck. However, in Alabama, they may soon be more difficult to get as the government is cracking down on these loans.

New Recommendations on Acquiring Payday Loans

In recent months, the Consumer Financial Protection Bureau (CFPB) announced special recommendations to end the practices perpetrated against serial borrowers. Serial borrowers are people who take out a loan to satisfy the debt of another. The regulations would apply to various loans that include very high interest rates, including payday loans, which may have an interest of up to as high as 300 percent.

According to the Director of the CFPB, many of these payday loans are designed to set up consumers to fail. They can be difficult to pay back even after they receive their paycheck thanks to the skyrocketing interest rates tied to them.

One chief requirement of these loans is requiring payday lenders to determine whether a borrower would be able to pay back all the interest and fees associated with the loan while still being able to afford their basic living expenses and other major financial responsibilities.

How Payday Loans Might be Restricted

Many residents of Alabama may find it far more difficult to obtain a payday loan as a result of these new restrictions. On average, the CFPB reported that the average fee for this type of loan can range anywhere from $15 up to $100 while the term may only be up to 14 days for repayment. Meanwhile, the interest can be around an average of $350, which can cause hardship for the average person.

With the new restrictions, payday loan lenders could still provide consumers with up to $500, but with a longer term and an interest rate that cannot be higher than 28 percent. Lenders would also be required to notify borrowers prior to withdrawing funds from their bank accounts to pay back the loan.

If you need help with a situation involving payday loans, the Loris Law Firm and Mobile bankruptcy lawyers are there for you. Contact the Loris Law Firm and discuss your case with Mobile AL bankruptcy lawyers at your earliest convenience.