Payday Loan Facts
Before a borrower applies for a payday loan, he should be aware of the facts. Most lenders require a steady income source, or proof of employment, to guarantee that the borrower will be able to repay the loan. The amount of the loan will depend on the income of the borrower. If the loan is not repaid on the due date, the payday lender may take necessary precautions to contact the borrower.
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Verification
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A payday loan may not be extended without proper identification. If a borrower applies for a payday loan, the lender must verify that the information on the application is true. The lender should keep a copy of the borrower's driver's license or other photo identification on file. The lender must very that the account is in good standing before processing the loan.
Posting Fees
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The lender must list any fees in its facility for a borrower to see. The fees must also be detailed in the contract agreement between the lender and borrower. Once the borrower signs a contract for the loan, the lender may not increase the loan fee amounts for that loan. If the borrower reapplies for the loan, the lender may increase the fees at that time, as long as the borrower is made aware of these changes. The amount of fees each lender charges is regulated by the state the loan takes place in, and must be adhered to by the borrower.
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Repayment Dates
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The lender may not collect on a loan on any dates before the actual due date agreed to in the loan agreement. If the lender chooses to process the personal check of the borrower before the due date, the lender can be liable for any fees that the borrower is accessed by the bank for not having the sufficient funds available to cover the cost of the check. The lender must abide by the rules and agreements in the contract, as does the borrower. Meaning if the borrower does not pay the check on the due date, or make arrangements with the lender, the lender has permission to process the personal check through the borrower's bank, and access any late fees and penalties.
Loan Amounts
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Payday loan facilities may not exceed the lending amount regulated in their state. If the cap that a lender may loan is $600 at a time, then the lender may not loan more than $600. A borrower on the other hand may go to different payday lenders in the state, and borrow as much as he would like with the different lenders, at the lenders' discretion. The rules have been established to keep the borrower from going too far into debt, and not being able to repay the loan.
References
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Payday lenders have the right to ask for personal references from a borrower. The number of references the lender requires varies at each payday loan center. In the event that the borrower does not repay the loan, the payday lender will try to contact him. If they are unable to reach him at home, work, or other contact addresses or phone numbers, the lender has the legal right to contact the references.
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