Things you should know before you use a "Pay Day Loan"

NEED CASH FAST?

Do you have a checkbook, but no money in the bank?

There are plenty of people who will lend you money.  But there's a new law about how much you can borrow and how much you can be charged.

WHAT IS A DEFERRED PRESENTMENT TRANSACTION?

It is the legal term describing a type of loan when the borrower gives the lender a personal check to hold until a certain date in return for cash.

ARE THESE LOANS LEGAL?  AREN'T THEY REALLY "PAYDAY LOANS?"

These types of transactions, when made by properly registered lenders, are legal.  If these transactions were "loans" in the traditional sense, the interest rate would be no more than 30%.  Many of them are known as "payday loans" because the borrower agrees to pay back the cash advanced with their next paycheck.

WHY DID FLORIDA PASS A NEW LAW ON THIS TYPE OF LOAN?

 Some lenders charged very high fees, also called interest.  They also allowed borrowers to "roll over" old loans, which put them even deeper into debt.

UNDER THE NEW LAW, HOW MUCH CAN I BE CHARGED?

The fees charged can be more than 10% of the face amount of the check, plus up to an additional $5 in verification fees (e.g., employment & bank).  While 10% may not sound like much, over a short period of time these fees can add up to a triple digit APR (annual percentage rate) of 291% or MORE.   These fees must be disclosed on your application.

HOW MUCH MONEY CAN I BORROW?

You may borrow up to $500 for no less than 7 days, and no longer than 31 days.  (Including fees, checks should never be over $555.00.) 

WHAT IF I NEED TO BORROW MORE THAN $500?

These types of transactions are not meant to be long-term loans.  They are designed to get you through a sudden, difficult financial time.  If you are in adebt and $500 is not enough to help you meet immediate obligations, then you may need to seek formal credit counseling and perhaps, a debt relief program.

CAN I HAVE MORE THAN ONE OF THESE TYPES OF LOANS?

 No.  Lenders must certify that you have no other open "pay day loans."  In additional, any previous loan must be repaid for at least 24 hours before applying for a new loan.  The lender will verify if you have an unpaid loans through a statewide computer database.  If you are not eligible for a loan, the lender will give you a printout with a phone number to call if you dispute the determination of eligibility.

WHAT IF I CAN'T PAY BACK MY LOAN ON TIME?

If you can't pay the loan on the date promised, you must inform the lender in person.  The lender will give you a list of consumer credit counseling agencies and you MUST contact one of them within 7 days.  If you cantact them within 7 days AND make an appointment for counseling, you will get a total 60-day grace period without any additional charge.  You must complete counseling within the 60-day grace period.  If you choose to enter a repayment plan, you must provide the lender with a copy by the 60th day. 

CAUTION: If you fail to notify the lender during either the 7-day or 60-day period, or if you have not made the appointment or completed the counseling within the time required, the lender can deposit or present your check for payment and pursue all legally available civil means to enforce the debt.

WHAT CAN THEY DO TO ME?

The lender can pursue all legally available civil means to:

  • Collect the amount of the check,
  • and the lender may charge you a NSF fee, if they deposited your check,
  • and the lender may pass on any charges their bank has charged them.
  • The lender may turn your check over to a collection agency for payment.
  • If you are put on a repayment plan & default, the lender can cash your check.  If they have collected more than allowed, the lender must refund your money to you.

WHAT THEY CANNOT DO 

  • If the lender says these rules don't apply to them, you may want to obtain a loan elsewhere or seek legal advice.
  • The lender can't deposit your check before the date on your agreement.
  • The lender can't deposit your check before the 60th day IF you follow the information under "WHAT IF I CAN'T PAY BACK MY LOAN ON TIME?"
  • If you agree to a debt repayment plan & stick with it, the lender can't charge you any extra fees. 
  • The lender can't prosecute you in criminal court for a check written under these agreements.
  • The lender can't turn your check over to the State Attorney's Office.
  • The lender can't file any criminal charges against you.
  • The lender can't allow you to "just pay the fee" to keep the loan in good standing.
  • The lender can't make any changes to your agreement.