Payday Loans

A payday loan is money the consumer borrows until payday. Payday loans are tempting when you are having difficulty paying your bills, but payday loans are never ideal. Payday loans are usually for low dollar amounts and must be repaid quickly. They tend to have high interest rates, and contain many fees. The interest and fees add up, and you could end up owing a lot more money than you borrowed.

These loans often become a debt you cannot afford to pay back while paying your regular bills. Also, the lender may take an automatic payment from your bank account. This can cause you to have insufficient funds in your account, costing you more bank fees. If you cannot pay off the loan in the required time, the lender will roll it over into a new loan and charge you extra fees.

Many payday loans are illegal in New York. This is because New York has a 25% interest rate cap on small loans meaning the lender cannot charge you more than 25% interest. Anyone who tries to make a payday loan, in person, online or over the phone could be violating state law. You can complain about companies trying to make or collect on illegal payday loans. To submit a complaint, you can contact the New York Department of Financial Services, the Consumer Protection Bureau, or the Federal Trade Commission.

If you cannot pay your bills or meet your expenses, you can try to:

  • Negotiate with your creditors,
  • Seek help from family or friends,
  • Ask your employer for a salary advance, or
  • Seek help from the government to pay for food, housing or home heating costs.

Payday loans should be a last resort.

Legal  Editors:  Mark  Grossman,  Esq.  and  Edward E. Klein,  Esq.,  May  2018

Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.

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