Payday Loans in Rehoboth, Massachusetts: Everything You Need to Know
Payday loans are short-term loans offered to borrowers to help them cover unexpected expenses that cannot wait until their next paycheck. They are typically small-dollar loans with high interest rates and fees. While payday loans are legal in many states, they are prohibited in Massachusetts, including in the town of Rehoboth.
What are payday loans, and how do they work?
A payday loan is a type of short-term loan where the lender provides cash advance to the borrower based on their paycheck. The borrower typically writes a post-dated check or provides access to their bank account for the loan amount and fees. The lender then holds the check or gets access to the borrower’s bank account until the borrower’s next payday. The amount borrowed plus the fees are automatically deducted from the borrower’s bank account on the next payday.
The fees charged by payday lenders can be high, and the APR can reach up to 400 percent in some cases. Borrowers who cannot repay the loan on their next payday may roll over their loan, which adds more fees and interest charges. This cycle of rolling over the loan can lead to a debt trap that is difficult to escape from.
Why are payday loans in Rehoboth, Massachusetts, prohibited?
In 2008, Massachusetts passed a law that prohibits payday loans. The law caps the interest rate of small-dollar loans at 23 percent and prohibits lenders from charging fees for check cashing, loan processing, or any other service related to the loan. This law was passed to protect consumers from predatory lending practices that were prevalent in the payday lending industry.
In Rehoboth, Massachusetts, payday lenders are not allowed to operate. Residents of the town cannot apply for payday loans online or in-person, and lenders cannot set up storefronts or operate from any physical location within the town. Those who seek payday loans can explore alternative options that are legal and safe.
What are the alternatives to payday loans in Rehoboth, Massachusetts?
Rehoboth residents who need cash quickly can explore alternative options that are legal and safe. Here are some alternatives to payday loans:
- Credit union loans: Credit unions offer small-dollar loans with lower interest rates and fees than payday lenders. They also work with borrowers to set up repayment plans that fit their budget.
- Credit counseling: Rehoboth residents can seek credit counseling services from non-profit organizations. Credit counselors help borrowers to come up with a budget and negotiate with creditors to lower interest rates and fees.
- Budgeting: Borrowers can create a budget that includes their income and expenses. They can then find ways to reduce expenses, such as cutting back on non-essential purchases, to free up money for emergencies.
Interesting Facts and Statistics About Payday Loans in Rehoboth, Massachusetts
- There are no payday loan stores in Rehoboth, Massachusetts, due to the state law prohibiting payday lending.
- In 2016, Massachusetts Attorney General Maura Healey reached a $2.2 million settlement with a payday lender who had been operating illegally in the state.
- The average payday loan borrower in Massachusetts takes out nine loans per year and pays over $500 in interest and fees.
Apply Now
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Conclusion
Payday loans are illegal in Rehoboth, Massachusetts, due to state laws that protect consumers from predatory lending practices. Borrowers who need cash quickly can explore alternative options that are legal and safe, such as credit union loans, credit counseling, and budgeting. If you need a personal loan, TheGuaranteedLoans can help connect you with potential lenders who can offer you the financial assistance that you need, without the high interest rates and fees associated with payday loans.