If you’re a resident of Lawton, Pennsylvania, in need of short-term financial assistance, you may be considering a payday loan. But before you apply, it’s essential to understand the legal landscape surrounding payday loans in the state of Pennsylvania.
What are Payday Loans?
A payday loan, also known as a cash advance, is a short-term loan whereby the borrower writes a post-dated check to the lender for the amount borrowed plus interest and fees, with the agreement that the lender will cash the check after the borrower’s next payday. Payday loans typically have high interest rates and fees, making them an expensive form of credit.
Payday Loans in Pennsylvania
It’s important to note that payday loans are illegal in the state of Pennsylvania. In 1998, the state legislature passed the Check Casher Licensing Act, which prohibited payday lending. The law stated that any lending institution offering loans with an interest rate of over 6% per year would be in violation of the state’s usury laws.
While payday lending is illegal in Pennsylvania, that hasn’t stopped some lenders from attempting to exploit loopholes in the law to offer high-interest loans. For example, some out-of-state lenders offer online payday loans to Pennsylvania residents, claiming that they’re not subject to state law. However, the Pennsylvania Attorney General’s Office has taken enforcement action against out-of-state lenders who attempt to offer illegal payday loans to state residents.
Why are Payday Loans Prohibited in Pennsylvania?
The main reason that payday loans are illegal in Pennsylvania is to protect consumers from predatory lending practices. Payday lenders often target low-income individuals who may be in desperate need of cash, and the high-interest rates and fees associated with these loans can trap borrowers in a cycle of debt.
Interesting Facts About Payday Loans in Pennsylvania
- In 2017, the Pennsylvania Supreme Court upheld the state’s ban on payday lending, ruling that high-interest payday loans were illegal under the state’s consumer lending laws.
- A 2017 report from the Center for Responsible Lending found that payday lenders drained over $500 million in fees from Pennsylvania residents in the previous five years.
- Despite the ban on payday lending in Pennsylvania, the state had the highest number of payday lenders per capita in the nation in 2019, according to a report from the Pew Charitable Trusts.
Alternatives to Payday Loans
While payday loans are illegal in Pennsylvania, there are alternative forms of credit available to residents who may need short-term financial assistance. Some options include:
- Personal loans from traditional banks or credit unions
- Credit card cash advances
- Short-term loans from online lenders
- Emergency financial assistance from non-profit organizations
It’s important to note that these alternatives may also come with high interest rates and fees, so borrowers should carefully consider whether a loan is the right choice for their financial situation.
Apply Now
While payday loans are not legal in Pennsylvania, TheGuaranteedLoans offers a connector service to help you find potential lenders who may be able to provide alternative forms of short-term credit.
To apply for a personal loan today, simply fill out our online application. As a connector service, we work with a network of reputable lenders who can provide you with the cash you need without resorting to high-interest payday loans. Please note that TheGuaranteedLoans is not a direct lender, and we do not make credit decisions or provide loans directly to our customers.
Conclusion
Payday loans are illegal in Pennsylvania, but that doesn’t mean that residents need to go without short-term financial assistance. By exploring alternative credit options and avoiding illegal and predatory payday loans, borrowers can make responsible financial decisions that empower them to meet their financial needs.