New Payday Lending Laws for 2010
New Payday Lending Laws for 2010
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New Laws
On January 1st of 2010, a multitude of new laws changed everything from tanning to puppy mills. In Kentucky, Washington, and Virginia, new laws concerning payday lending also went into effect. Similar laws are being considered in Mississippi, and many other states.
Limitations in Kentucky
In both Washington state and Kentucky, a database of payday borrowers is being created that will track all borrowers and their loans. In Kentucky, borrowers will be limited to two loans totaling no more than $500 at any one time. These laws are designed to ensure that lenders do not over-lend to borrowers who may be overextended.
New laws in Washington state
In Washington state, borrowers will be limited to eight payday loans in any twelve-month period. Borrowers will also be barred from taking out multiple loans from different vendors. With borrowers in the universal database, lenders will be required to check that database before offering a loan to any customer.
A public sector option
Virginia is taking a more public-sector approach, offering state employees personal installment loans that are paid back through direct debit out of their paychecks. At a lower interest rate than most payday loans, these installment loans offer public employees an option outside of the established payday lending system. However, these loans also become a part of the employment and payroll records of that employee.
Being responsible with debt
Many states are considering new regulations on payday lending and lenders. There are many people that misuse payday lending and get stuck in bad situations. Rather than addressing the underlying problems that cause the need to misuse payday loans, these regulations just limit the resulting effects. The important thing to remember is that payday loans and personal installment loans can be used very effectively as one-time assistance in tough financial situations.
