New Jersey Payday Loan Laws and Legislation
Payday loans, or cash advances represent small amounts of cash given for a short period of time for a fee or under interest. In the state of New Jersey such practice is considered illegal according to cash checking laws. However residents of the state can still apply for some companies that offer payday lending services.
Cash checking law in New Jersey prohibits a person to cash a paycheck without a banking account. So, a person can only deal with the back where he or she has got an account. And this is the reason why payday lending businesses cannot operate in the state - they are not allowed to cash such checks.
Moreover, the state has got pretty strict usury laws. It forbids charging borrowers the interest exceeding 30% per annum. This is a really small rate for businesses that usually charge 3-digit numbers of APR. However this is the state law that aims at preventing usury and every lender charging in excess is considered violating the law. This is also the reason why legal lenders do not work in the state.
However, those who need a loan will find where to get one. There are companies that provide short-term loans that charge fees instead of interest. In case they name it this way, it is considered legal. Other businesses offer their services online - this is not considered a violation as well.
Those payday lenders who operate in New Jersey and charge fees instead of interest should comply with the following restrictions: maximum amount of loan is $2,500; borrowers with three defaulted loans for the period of the past 12 months are not eligible for a loan; a company is obliged to keep all the loan agreements in files for a period of 5 years; finally, every check that a company issues should contain its name and contact details in clear print.
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