Payday loans are an emergency source of quick cash that many people tend to consider due to their easy access. With the rising cost of living, people look for loans to cater for their daily needs. In Rochdale, Massachusetts, payday loans seem like a viable option when faced with financial emergencies. However, it is essential to understand the payday loan laws in Massachusetts as it is illegal in the state.
The legality of payday loans in Rochdale, Massachusetts
Payday loans have been illegal in Massachusetts since 2008, following the passing of the Small Loan Rate Cap in 2008. The law stipulates that lenders operating in the state are not allowed to charge more than 23% interest per annum on loans of $6,000 or less.
Therefore, any payday lender that may approach potential clients in Rochdale, Massachusetts offering payday loans should be avoided, as they are acting against the law.
Alternatives to payday loans in Rochdale, Massachusetts
Just because payday loans are illegal, it does not mean that you have no alternatives when seeking a quick loan in Rochdale, Massachusetts. There are plenty of financial options that you can consider:
- Credit unions: Credit unions offer their members low-interest rates on loans, even for those without perfect credit scores. They may also offer payroll advance loans for their customers at the lowest interest rate, making it a better alternative to payday loans.
- Traditional banks: Traditional banks offer various types of loans, including personal loans, that may take several days to process before disbursing the funds. However, traditional banks are still a better alternative to payday loans as they offer lower interest rates.
- Emergency Assistance Programs: Check local charity organizations for assistance. There could also be State emergency assistance programs like the Low-income Energy Assistance Program (LIHEAP) that can provide emergency assistance for utilities or other unforeseen costs.
It is always advisable to consider financial alternatives before opting for high-interest payday loans.
Why Payday loans in Rochdale, Massachusetts are illegal
Payday loans are a quick fix to financial emergencies. However, they attract high interest rates and have a short repayment period, which becomes a burden to borrowers. Several people applying for payday loans may not be in an economic position to pay back the loans, and as a result, fall into a debt cycle.
The high interest rates, paired with the short repayment period of a few weeks, makes it difficult for borrowers to close the loan after repayment. This creates a cycle of taking out one loan to repay the previous one, leading to the borrower being trapped in a debt cycle. As a result, the state made payday loans illegal to protect consumers from financial exploitation by payday lenders.
Interesting Facts About Payday Loans
- Approximately 12 million Americans take out payday loans each year.
- The average fee for a payday loan is $55 every 2 weeks.
- Payday loan borrowers pay more than $7.4 billion in fees annually.
- In some cases, payday loan fees can result in annual interest rates of over 400%.
- More than 80% of payday loans are rolled over or renewed within 14 days.
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