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Connecticut Laws and Regulations on Installment Loans
Installment loans are popular in the US nowadays. With an online installment loan with no credit check loan's minimal requirements and the country's unstable economy, it is not surprising that many people are availing themselves of these types of loans. Moreover, it is fast, convenient and there's no need for any form of collateral to get an unsecured installment loan in Connecticut.
Unlike other conventional forms of loans, the payday installment loan process is simple and easy to understand. There are many online financial institutions which offer them and most of them are readily available on the Internet. The borrower will just have to fill-up an online application form which asks for some personal, employment and banking details.
This information will help the lender decide whether or not to approve the online installment loan application. Once the installment loan is approved, a post-dated check is signed by the borrower which states the amount of cash borrowed with the imposed fee as well. The whole procedure may take a day to process but longer if it's the first time a person has transacted with the particular installment loans financier.
The installment loan period lasts only for several weeks and once the customer's pay check is deposited into his or her personal bank account, the lender then deposits the post-dated check and gets the loaned money back with the interest rate. This is sometimes referred to as the deferred deposit.
There are many legal installment loans in many states but there are certain states which prohibit them. One of which is the state of Connecticut.
Connecticut installment loans do not hold a legal status as a lending establishment as stated by the Connecticut General Status 36a-563. Installment loans regulations allow a person to borrow a few hundred dollars, and in some cases, up to two-thousand dollars. However, the interest rate is much higher when compared to other short term installment loans even if a person pays on time.
Moreover, if a borrower decides to renew their installment loan, he or she may have to pay as much as 400% to 700% interest rate. But the state's usury limit for installment lending institutions, which are not banks or otherwise granted an exemption, is 12% a year. The strict limit set by the law may be because of the many horror stories experienced by consumers when they are left with more debt after they have availed themselves of an installment loan.
If however, nonbank lenders wish to acquire an interest rate higher than the allowed 12% for their unsecured personal loans, then they are required to acquire the necessary license consistent with Connecticut's small loans law. Additionally, when granted authorization to operate, the lender may ask a rate higher than 12% but it shouldn't get any higher than the rate usually allotted by state regulations for connecticut instllment loans.
The state of Connecticut also considers the add-on interest included in the loans. Thus, for people who wish to apply for a long term installment loan, the government instead encourages them to go to banks, pawnbrokers or credit unions.
But the Connecticut small loan law does not only put a limitation of 12% usury limit annually, it also prohibits the "wage assignment." Assignment of wages is defined as the voluntary transfer of debtor's pay check in advance to pay for a certain debt. Although payday loans have no "formal assignment" of the wages, many still believe that this is what's really happening when the loan is g ranted as there's that expectation that the next pay slip will be deposited to the lender's account.
The main target of this deferred deposit loan is for the low-income population who are struggling to meet all their monetary obligations in between their paydays. It is also useful for people who have bad credit histories because no credit background check is performed in order to eligible for a no credit check installment loan online loan. But the laws imposed to regulate to installment lenders practices are there to protect the residents of Connecticut from high usury and scams offered by some lenders. As a result, unscrupulous installment lenders find it challenging to infiltrate or operate this state.
Though the residents of Connecticut understand the laws imposed by the state is mainly for their own good, they are left wondering what institution or solutions they have available to them when they are faced with urgent bills and emergency expenses. According to financial experts, online installment loans are an excellent alternative solution for someone who's already strapped for cash and is still weeks away from the next pay check.
The first suggested an alternative is to borrow cash from a credit union. These types of installment lenders institution belong to the list of several credit and loans providers for which the state of Connecticut does not require a small loan lender license.
There are many local cooperatives which provide small, short-term installment loans to all of their members. Credit union's loan approval rates are generally high and approval is quick especially if it is intended for emergency use.
But the best part when getting a small installment loan from credit unions are the typically low-interest rates which may have a maximum of 16% annually.
A majority of these credit unions even give free financial counseling and help all interested members to come up with a solid financial plan with the hopes that they get back on their feet one day and there's no need to resort to lending anymore.
If a person is not a member of any credit union, then perhaps he or she could take advantage of cash advance installment loans granted by some credit card companies. Although it may cost the borrower about 30% annual percentage rate and it may impose a cash advance fee, it is still a much cheaper alternative than traditional installment payday loans.
But if a person is still not eligible for the two above mentioned alternatives, then perhaps he or she could take advantage of small consumer loans from consumer finance companies. They also offer small, short-term loans but with a higher interest rate. The annual rate may be between 25%-36%, however, it's still a better offer than what typical payday loans providers ask.
For instance, an installment loan applicant could borrow $1000 from these companies for a year but still, they pay back less than approximately $300 as compared to traditional payday loans.
Connecticut is one of the 17 states which prohibit brick and mortar installment loans operations. It may be due to the unreasonable rates traditionally attached to these loans or the financial risk that consumers face every time they borrow cash.
But whatever purpose installment loans regulations may have, one can be certain that they are focused on securing and safeguarding the welfare of their residents from businesses which only aim at profits and do not look out for the best interest of installment loans borrowers.
To avoid unethical lenders, just apply for a quick easy online installment loan in Connecticut at installmentloanscompany.com .
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