Payday loans are available in many states throughout the United States, however, they are prohibited in Arkansas. This means that individuals living in Arkansas City, Arkansas, are unable to acquire payday loans from any lender within the state. The law passed by the Arkansas state government prohibits the practice, which makes it illegal to issue payday loans in Arkansas.
So, what exactly are payday loans?
Payday loans are a short-term loan form that grants people quick access to cash. Usually, these types of loans are due on the borrower’s next payday. If the borrower is unable to repay the loan on the due date, additional charges and fees will be added to the loan’s balance.
Payday loans are typically used by people who need quick cash for an emergency, such as a car repair bill or a medical expense. Unfortunately, because of their high-interest rates, these types of loans are prone to trapping borrowers in a cycle of debt.
Payday loans in Arkansas City, Arkansas – the Law
As mentioned earlier, payday loans are prohibited in the state of Arkansas. This law was enacted after the Arkansas state government deemed that the high-interest rates and fees associated with payday loans were too high, making it impossible for borrowers to pay back the debts on a timely basis.
Therefore, there is no lender within the state of Arkansas, including Arkansas City, who is authorized to issue payday loans. Any lender or an unlicensed lender who issues payday loans is subject to legal consequences under state law.
The Alternatives to Payday Loans
While payday loans may seem like a quick solution to urgent cash needs, they are not the only option for people in Arkansas City, Arkansas. To address the problem of requiring quick cash, the following alternatives can be sought out:
1. Personal Loans
Personal loans can be issued by banks or credit unions. These types of loans are generally long-term and have lower interest rates than payday loans. The borrower is given the option to pay back the loan amount over a longer period.
2. Credit Cards
Credit cards have higher interest rates than personal loans, but they are still a better option than payday loans. If the borrower has a credit card, they can withdraw cash from it to pay for their emergency without having to pay the high-interest rates offered by payday lenders.
3. Payment Plan Arrangements
For people who need to make a payment, such as medical bills, utilities, or rent, most companies offer payment plan arrangements. These arrangements permit the payment to be made over a period of time in smaller increments without accruing interest or fees.
Interesting facts and statistics about payday loans in Arkansas City, Arkansas
- Arkansas is the only state in the United States to prohibit payday loans
- Borrowers in Arkansas who have to repay a payday loan spent, on average, 37% of their monthly income on those loans. This is more than three times the average percentage other borrowers across the country are spending
- In 2008, the Arkansas Supreme Court avowed that the state’s consumer protection laws apply to out-of-state payday lenders that offer loans online to Arkansas borrowers
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