California Payday Loans

California payday loans are available as a necessary lending process for borrowers who need funding immediately. As you can tell from the name, a payday loan is one in which is made only for a very short period of time. During this time, the lender charges fees and interest until the loan is paid back on your next payday.

Generally, every payday loan is made with the assumption that the borrower will hold the loan balance for a period equal to one or two paychecks at work. Thus, most loans are made on a monthly basis with 30 day repayment terms. Other loans, however, are made on the assumption that a loan is to be paid back within two weeks; the amount of time necessary until the borrower is paid by their place of employment once more.

California Payday Loans
California is different from other states in that it writes legislation that requires special terms for borrowers. The state of California seeks to make the process as transparent as possible, and reduce the cost of interest to as low as possible to protect consumers. Be advised that payday loans as a business are very much different from one state to another. Each state has the right to regulate its own payday loan industry, and California is one of the most active states in writing legislation for payday loans.

The regulations on the payday loan industry are intended to reduce the possibility that borrowers accept more money than they can afford to pay back. Here are the guidelines for California payday loans to consumers:

Maximum loan amount – The maximum loan amount for a California payday loan is set to $300, an amount which is small enough to ensure that the borrower does not borrow too much. Additionally, this amount is usually enough to settle immediate cash emergencies.

Maximum Finance Charges – California payday loans cannot have a maximum finance charge or fees totaling more than 15% of the check. This amount is on the check only, not the amount of borrowing. A borrower who has a $1,000 check could legally be charged a combination of fees and finance charges equal to $150, no matter how much is borrowed.

Maximum Loan Term – A California payday loan cannot be written to exceed 30 days. Thus, all debts are structured with the basis that the borrower will make good on the loan within one month. Debts which are not paid off after 30 days are still rolled over, however, and a new month’s fees, interest, and charges will be added to the balance if it is not paid in full.

Annual Interest Rate – California payday loans come with a cap on the annual interest rate to 459%. This interest rate is also referred to as the effective annual rate, as it includes all fees, interest, and other charges to the balance. The finance charge for a $100 loan is also capped at $17.65 for 14-day loans. While steep, this cost often covers only the cost of running the payday loan operation, hiring staff, and covering unpaid loan losses.

Payday Loans in Your Finances
A payday loan is a financial product which should not be used regularly. Due to the high cost of interest, the fees and the long-run expense, a payday loan should be paid off in full as soon as possible. Borrowers should seek out lower interest loans if possible, and work to rectify their financial condition so that emergency borrowing does not become a habit.

Alas, there are perfectly sound and reasonable reasons to use a payday loan. Emergency medical bills, car repairs, and late bills do pop up occasionally, and using a payday loan to cover the immediate cost is often better than the alternative–waiting up to two weeks for your next paycheck. Keep in mind, though, that payday loans are not a form of everyday financial products, and they are best left for only extreme cases. Even credit cards, which are known for their massive interest rates, are only a fraction of the cost of a payday loan.

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