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New Jersey Installment Loans
Installment loans, also referred to as cash/paycheck advances, are outlawed in the state of New Jersey. However, the laws are not stringent enough to curb the practice entirely.
There are several loopholes in the laws that installment loan companies exploit to keep their businesses afloat and make the loans accessible to New Jersey residents.
New Jersey's Payday Installment Lending Laws
The laws in this State seek to stop payday lending through a number of methods. The most prominent method is the use of usury laws, which forbid cash checking and put restrictions on the interest rates paid on small loans. Hence, installment loans are considered unlawful in this State as per the laws that forbid cash checking.
Usury is an inordinate or an unlawful interest rate. In New Jersey, the interest rate is capped at 30% per year. In general, installment loans have interest rates of between 250% and 600%. This effectively rules out their operations in this American State because their rates far exceed the government's limits.
Cash checking permits borrowers to cash their paychecks anywhere, without necessarily having a bank account. New Jersey banned this practice, meaning that individuals are not allowed to cash their checks in banks or facilities where they do not have accounts.
Nonetheless, New Jersey residents can still gain access to installment loans since companies term the interest rates as fees, thereby legitimizing the loans. If these rates were to be termed as interest rates, the loans would be rendered illegal. This absolves the installment loan company from having to pay usury charges. Another way New Jersey companies circumvent these laws is by offering the loan services online. But in certain States such as Massachusetts, Maryland, and Georgia, online installment loans are prohibited.
Companies have the liberty to set their own loan fees, as the State does not have any provisions with regard to them. In addition, the State does not have any restrictions on the number of times a customer can refinance their installment loan. However, there is a law that caps the amount of money a customer can borrow in a given time. Lenders in New Jersey can only give out a maximum of $2,500 at any given time. The law also stipulates that the lender ought to deny any customer who defaults his/her loan three times within a 12-month time-frame. The customer is allowed reapply after six months.
New Jersey has some distinct licensing laws for these companies, which is ironical considering its general stance on their activities. For the owner of a lending company to set up their business, they ought to meet certain criteria before applying for the license. It is mandatory for the company to have a net worth of $50,000 and pay a licensing fee of $2000 after every two years. The company must also have photographic evidence of every check it disburses, and have kept accurate records of all the loan transactions for a minimum of five years. The checks they issue to customers must have the company's name clearly printed on the face of the checks.
Other important details which the State requires lenders to keep include the following: the borrower's name, their SSN (Social Security Number), time and date of the loan, the date and value of check and the fees charged in the transaction. Additionally, it must indicate the name of the lender and persons who acted as witnesses when the transactions were being carried out. The borrower will be required to append his/her signature to the copy of the check, and an image attached to the record.
Finding An Installment Loan Company In New Jersey
All in all, new jersey installment loans are an excellent way of dealing with the financial constraints you may be facing at any particular time. Companies which offer these services online make it more convenient and easily accessible to the customers - you will only need to fill an online application form and wait for it to be approved, all from the comfort of your home.
Lastly, conduct adequate research before dealing with any online service provider. The service provider has to be credible and reputable because you will be submitting confidential information to them, and it is their responsibility to protect this information and keep it secure from fraudsters.