Understanding Payday Loans in Buckner, Arkansas
Payday loans, also known as cash advances, short-term loans, and deferred deposit loans, have been around for quite some time. They’re marketed as a quick solution for those facing unexpected financial emergencies. However, customers often end up trapped in cycles of debt and financial ruin. In Buckner, Arkansas, payday loans are prohibited by law, and for good reason.
What are Payday Loans?
Payday loans are high-interest, short-term loans that come due on the borrower’s next payday. These loans typically range from $100 to $500 and have an average term of two weeks. To get a payday loan, the borrower must present a post-dated check or provide electronic access to their bank account. The lender then gives the borrower cash, minus a fee, which can be as high as $25 per $100 borrowed.
Why are Payday Loans Prohibited in Buckner, Arkansas?
In 2008, the state of Arkansas passed the Arkansas Check Cashers Act, which effectively banned payday lenders from operating in the state. The law caps interest rates at 17% per year, effectively rendering payday lending unprofitable. Furthermore, the Act prohibits rollovers, meaning borrowers cannot take out a new loan to pay off an old one. This provision prevents the cycle of debt that many customers experience.
The Risks of Payday Loans
Payday loans come with significant risks, including:
- High interest rates – Payday loans can have interest rates as high as 400%. For example, a $100 loan with a $25 fee and a 14-day term has an APR of 651.79%.
- Debt traps – Many customers end up borrowing repeatedly to pay off prior loans, leading to a cycle of debt and financial ruin.
- Unreliable lenders – Some online payday lenders are unlicensed and operate illegally, putting borrowers at risk of identity theft and fraud.
For these reasons and more, Buckner, Arkansas made the right decision in prohibiting payday lending.
Facts and Statistics
According to the Center for Responsible Lending, payday lending costs American families over $4.1 billion annually in fees and interest. Additionally, the average payday borrower takes out eight loans per year, spending nearly $500 in fees alone. Fortunately, Buckner residents are protected from these harms by the state’s payday lending ban.
Apply Now
While payday loans are prohibited in Buckner, Arkansas, unexpected financial emergencies can still occur. If you need a loan for an emergency, we encourage you to consider alternative options. At TheGuaranteedLoans, we offer a connecting service that will match you with reputable lenders who can provide personal loans, installment loans, and other types of financing.
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