Payday loans in the United States are a growing industry.
Regulation of lending institutions is handled primarily by individual states, and the industry exists atop an active and shifting legal landscape. Lenders lobby to enable payday lending practices, while opponents of the industry lobby to prohibit the high cost loans in the name of consumer protection.[1] In the United States, finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to annual percentage rates (APRs) from 390 to 780.[2]
Payday lending is legal and regulated in 37 states. In 13 states it is either illegal or not feasible, given state law.[3] When not explicitly banned, laws that prohibit payday lending are usually in the form of usury limits: hard interest rate caps calculated strictly by annual percentage rate (APR). Since Oct. 1, 2007 a federal law has capped lending to military personnel at a maximum of 36% APR as defined by the Secretary of Defense.[4]
US loan process
If the account is short on funds to cover the check, the borrower may face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In Washington and some other states, extended payment plans are required by state law.
References
http://en.wikipedia.org/wiki/Payday_loans_in_the_United_States
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