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Borrowers and lenders can both benefit from Alabama installment loans, but there have been incidents in which lenders took advantage of borrowers and vice versa. Laws were established to prevent these negative occurrences from happening, often in response to a real case.
Now, most states have a set of statues specifically for payday lending regulation, except for West Virginia, Vermont, Pennsylvania, New York, New Jersey, Massachusetts, Maryland, and Connecticut. Alabama installment loans have gained much attention from the legal system in times past and recently. Continue reading to learn more about what the state's laws entail regarding 24/7 installment loans.
Limitations on Alabama Installment Loans Borrowers
Alabama residents seeking out an income based installment loans lender, hoping a short-term loan is their financial solution, might find they simply cannot get enough funds. While there are some states where consumers can borrow upwards of $1,000, the law in Alabama places a $500 cap on loans. Many states have the same installment loan borrowing limits, including Alaska, Arizona, Colorado, Delaware, Florida, Indiana, Iowa, Kansas, Kentucky, Missouri, Nebraska, New Hampshire, North Dakota, Oklahoma, Rhode Island, South Dakota, Tennessee, and Virginia, but there are quite a few states where the limit is less. The loan period allowed for bad credit installment loans in Alabama is 10 to 31 days. Borrowers in the state are allowed only one loan per lending location and only one rollover, should they be unable to repay. In addition, they must take a break that spans one business day if they have borrowed two installment loans in succession.
Limitations on Lenders
Installment loans no credit check direct lenders in Alabama have been subjected to a great deal of criticism, yet they too have limitations placed on them by the state. The most important of these limits on lenders is that they are not allowed to charge borrowers more than 17.50% on every $100 of a loan. This limit includes any finance charges and fees, but it still means they get to charge an annual percentage rate of 456.25% on every $100 loan. Plus, the requirement of this rule lasts only a fortnight. While this offers borrowers some protection against high rates, it still leaves a lot of room for lenders to charge a lot of money.
Requirements for Installment Lenders
Most of those considering becoming a borrower is very concerned about the requirements they must meet in order to receive funds from lenders, but they should also note the requirements placed on lenders by the Alabama state government. No credit check installment loans lenders in the state are regulated according to the Deferred Presentment Services Act.
They must meet certain criteria just to obtain a license to lend. This means potential Alabama installment lenders must present a financial statement proving they have at least $20,000 in assets for each business location they desire to open. They must not have any shareholder, director, or officer that owns more than 25%, nor any past records of fraud, suspension, or removal from being a lender. Also, they must not have been convicted or a felony, including any office where there was a breach of trust or dishonesty.
The requirements for being an installment lender according to Alabama state law serves to protect consumers who would be borrowers from being taken advantage of. However, there are other laws that dictate what a lender can and cannot do in their relationship with borrowers. These stop the fraudulent behavior from both parties. For an installment loans example of limitations such as lenders are not allowed to enter into transaction with customers that already have outstanding payday loans totaling more than $500,
whether they be with a different lender or not. Lenders are also required to report fraudulent checks to the district attorney within five business days of receiving them. This includes checks that have been stolen, altered, forged, or obtained in any illegal manner.
Being a Wise Installment Loans Borrower
It is important for borrowers to understand their rights under the Alabama law. Even with the law in place, there might be some dishonest lenders who try to take advantage of borrowers who are uninformed. Remember that lenders are required by law to present a clear, understandable written agreement that explains all the details of the loan, including any fees and the date upon which the check or debit information given for the loan will be presented for payment. Lenders are also not allowed to demand a co-signer on the loan or ask for any other type of security for the transaction. Any borrower encountering a lender who refuses to submit to the requirements of the law can file a report with the licensing agency.
Statue Changes for Alabama Installment Loans
Laws for Alabama installment loans might change at some point in the future. Changes are likely because many motions have been set for the court system in years past, although they came to no effect. In 1999, Alabama was one of 19 states having to deal with a legislation procedure about small installment loans. There was also a bill presented in 2013, calling for the lowering of interest rates lenders are able to charge. For many, the 456% APR is too much. The bill would lower the amount to 36% annually, but it failed to be established as a law. Some consumers are glad the bill did not pass because it also called for the number of payday loans an individual borrows to be tracked using a central database.
The laws in Alabama regarding online installment loans have been established to grant protection to both borrower and lender. These laws serve to reduce the number of incidents involving fraud and protect the overall economy in the state.
However, this has not adequately protected the borrowers who fail to manage their money correctly. When borrowing an installment loan, it is important to be responsible, know the interest rates and penalties, and have an effective plan to pay back the loan. Some may say the financial problems consumers sometimes encounter after getting a loan is the fault of the lender, but the risks involved for borrowers have been well noted.
Smart borrowers are able to make installment loans work for them without getting into trouble financially. The first step for borrowers in Alabama is knowing about the laws in their state.
The next step is to fill out our short simple installment loans online application to be submitted instantly to hundreds of dozens of top tier Alabama installment loans providers today!
It's fast and easy and you can receive an installment loan in Alabama in less than 5 minutes and receive your loan in as little as 24 hours!