Missouri Payday Loan Laws and Legislation

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Payday loans are presupposed for situations when money is needed urgently and a person cannot find the way where to get it. Generally, they are cash advances given to a person against the next paycheck for a fee.

In the state of Missouri the laws concerning payday lending are the most favorable for the lenders and, actually, the softest in all the states. The existing legislation was passed in 2002 and it allowed a lot of payday lending businesses to flourish. Nowadays there are about 1,200 of such companies apart from the ones that operate online. The state has got truly the most lenient laws in regards to the interest rates as well.

Payday lenders are allowed to operate in the state provided they have got a license issued by the state's Division of Finance. It is required that the license was displayed in a visible place and contained all the information about the payday lender and the business as well as the Division of Finance contact information.

According to the amendments in the law in 2006 the maximum amount of a payday loan should not exceed $500. One loan at a time is allowed and it is not prohibited for a lender to charge fees and interest. Loans are given for the term of 14-31 days. Interest rate should not exceed 75% for an amount of loan; the same interest is charged for every renewal. With all this APR in the state of Missouri is the highest - in some cases it amounts to 2,000%. It is allowed to give a borrower 5-6 rollovers.

It is required by the law that a lender should provide a borrower with a copy of agreement including all the information about the payday lending transaction. Beside, a notice about the terms and condition should be included and a borrower is required to read the contract carefully before signing it. Transaction can be cancelled by the end of the next business day in case of necessity.

It is required that a lender should make the information about charges, terms and APR visible and clear to customers. Moreover, a lender is also required to keep all the documents about payday lending transaction and all the records for at least 2 years. In case any lender decides to cease the operation of a lending company, the Division of Finance must be notified at least ten business days prior to it. Moreover, he is obliged to provide the letter explaining the reasons for such a decision, hand in the license and also give the location of any receivables.

Criminal actions against borrowers are prohibited in the state unless it is when the borrower stopped payment on the check or closed the account before the repayment was done. Collection fees are allowed in case of insufficient funds but not via a series of Automated Clearing House (ACH) transactions. Besides, lenders are obliged to keep all the customers' information private and not to share it with other lenders. It is required that a borrower was informed about APR charged by the payday lending business before signing the agreement.

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