Payday Loans in Durham, Pennsylvania: Why They are Prohibited
Payday loans are a type of short-term loan typically taken out by people who need quick cash to cover unexpected expenses. These loans are usually due on the borrower’s next payday and are often associated with high interest rates and fees, making them a controversial form of lending.
In Durham, Pennsylvania, payday loans are prohibited by law. The state’s Consumer Discount Company Act makes it illegal for lenders to charge interest rates higher than 6% per year on small loans of up to $50,000. Payday loans typically carry interest rates that far exceed this cap, which is why they are not available in Durham or any other part of Pennsylvania.
What Are the Alternatives to Payday Loans in Durham, Pennsylvania?
While payday loans may seem like an easy solution to a financial emergency, there are usually better alternatives available. In Durham, Pennsylvania, some of the most common alternatives to payday loans include:
- Credit Union Loans: Credit unions are not-for-profit financial institutions that often offer small loans with low interest rates and flexible repayment terms. Many credit unions have programs specifically designed to help members who are struggling financially.
- Credit Card Cash Advances: If you have a credit card, you can often get a cash advance from an ATM or a bank. However, keep in mind that cash advances usually come with high interest rates and fees, so it’s important to pay them back as soon as possible.
- Negotiated Payment Plans: If you’re having trouble paying a bill or a debt, try contacting the company or creditor to see if you can arrange a payment plan. Many companies are willing to work with customers who are experiencing financial difficulties.
Why Are Payday Loans Prohibited in Durham, Pennsylvania?
Payday loans are prohibited in Durham, Pennsylvania, and many other states, because they often trap borrowers in a cycle of debt. Because the loans are due on the borrower’s next payday and carry high interest rates and fees, many borrowers have trouble paying them back on time. This frequently leads to rollovers, where the borrower takes out a new loan to pay off the old one, resulting in additional fees and interest charges.
Research has shown that payday loans can have a negative impact on borrowers’ financial well-being. A study by the Pew Charitable Trusts found that 12 million Americans take out payday loans each year, and that the average borrower takes out eight loans of $375 each per year. The study also found that borrowers spend an average of $520 in fees to borrow that amount.
Interesting Facts and Statistics About Payday Loans
- Payday loans are prohibited in 18 states and the District of Columbia.
- The average payday loan borrower takes out 10 loans per year.
- In 2019, the Consumer Financial Protection Bureau proposed a rule to deregulate the payday lending industry, but the proposal was ultimately scrapped.
- Payday lenders often target low-income and minority communities, which are disproportionately affected by high-interest loans and financial instability.
Apply Now: Find Alternative Lenders in Durham, Pennsylvania
If you’re looking for a short-term loan in Durham, Pennsylvania, TheGuaranteedLoans can help you connect with lenders that offer alternative products, such as installment loans, personal loans, and lines of credit. Our online application process is quick and easy, and we work with a network of trusted lenders that are committed to responsible lending practices.
Remember, TheGuaranteedLoans is a connector service, not a direct lender. We do not make credit decisions or provide loan funding. Instead, we facilitate your connection with potential lenders who can offer you alternative lending products that may better suit your financial needs.
To get started, simply fill out our online application form and we’ll match you with lenders that are best suited to your unique financial situation. Our service is free to use and requires no collateral, so you can apply with confidence knowing that you won’t be putting your assets at risk.