Payday loans are becoming increasingly popular in many states across the United States, but Pennsylvania is one state where they are strictly prohibited. While payday loans can provide quick access to funds, they can also come with incredibly high interest rates, and often leave borrowers in a worse financial position than before they took out the loan.
What are payday loans?
Payday loans are short-term loans that are typically due on the borrower’s next payday. They are usually small-dollar loans, ranging from $100 to $1,000, and have incredibly high interest rates. In many cases, the interest rates can be as high as 400%, making them an incredibly expensive way to borrow money.
Payday loans in Chest Springs, Pennsylvania
While payday loans are legal in many states, they are strictly prohibited in Pennsylvania. In 2018, a law passed that made payday loans illegal in the state, protecting Pennsylvania residents from the debt traps that can come with these types of loans.
Why are payday loans prohibited in Pennsylvania?
Payday loans are often seen as predatory because they are designed to trap borrowers in a cycle of debt. Borrowers who take out a payday loan often find themselves unable to repay the loan on time. This leads to the loan being rolled over and the borrower being charged additional fees and interest. This cycle can continue for months or even years, with the borrower getting further and further into debt.
Alternatives to payday loans in Chest Springs, Pennsylvania
While payday loans are not available in Pennsylvania, there are still alternatives available for borrowers who need quick access to cash. Here are a few options:
- Credit unions: Many credit unions offer small-dollar loans with reasonable interest rates and repayment terms.
- Personal loans: Borrowers can apply for a personal loan from a bank or online lender for larger amounts of money and more flexible repayment terms.
- Credit cards: Borrowers can use a credit card to pay for unexpected expenses, but it is important to pay off the balance in full each month to avoid high interest rates.
Interesting facts and statistics about payday loans in Pennsylvania
- According to the Pennsylvania Department of Banking and Securities, the average payday loan in the state is $375, with an average interest rate of 391%.
- In 2018, the Pennsylvania Supreme Court ruled that Think Finance, an online payday lender, was illegal in the state and ordered them to repay $4 million to Pennsylvania consumers.
- A Pew Charitable Trusts study in 2016 found that the average payday loan borrower in Pennsylvania takes out eight loans per year, with a total cost of $520 in interest and fees for a $375 loan.
Apply now
While payday loans are illegal in Pennsylvania, there are still other options available for borrowers who need quick access to cash. If you are in need of a small-dollar loan, TheGuaranteedLoans can connect you with potential lenders who may be able to provide you with the funds you need. We are not a direct lender, but our service allows you to apply for a loan online and receive multiple offers from lenders. Apply now to see if you qualify!