In Shannon, Georgia, Payday loans are prohibited. Here’s what you need to know about payday loans and why they are forbidden in Georgia.
What are payday loans?
Payday loans are a type of short-term loan that typically has a high interest rate and fees. These loans are usually due on the borrower’s next payday and are designed to provide quick cash for those who need it. The amount borrowed is typically small, ranging from $50 to $500 or more.
Why are payday loans banned in Georgia?
Payday loans and other similar high-interest loans have been banned in Georgia since 2004. The law was passed to protect Georgia consumers from the predatory lending practices that payday lenders are infamous for. The state has set the maximum percentage rate for any kind of small loans, payday loans inclusive, to prevent the building up of the interest and fees lenders were including to keep Georgia citizens trapped in the loan cycle forever.
What makes payday loans dangerous?
There are various reasons why payday loans should be avoided, but the high interest rates and fees are the primary concern. Due to the short repayment period, borrowers who can’t repay on time will often rollover the loan, which means taking out a new loan to repay the previous one. When this happens, fees and interest can add up quickly and create a debt cycle that can be difficult to break.
Moreover, lenders are known to target vulnerable communities with limited access to traditional banking and lending options. Often, these borrowers don’t have the income or credit history to qualify for conventional loans, leaving them susceptible to payday loan lenders who often require little more than proof of income and a checking account.
Facts about payday loans in Shannon, Georgia:
- A study conducted by the Center for Responsible Lending found that payday lenders cost Georgia families more than $154 million annually.
- The average APR for a payday loan in the state of Georgia is 400%, which is almost twice the national average of 200%.
- Between 2004 and 2013, Georgia saved over $1.4 billion in fees, thanks to the state’s ban on payday loans.
- Despite the laws against payday lending in Georgia, many borrowers still find ways to obtain these types of loans and fall into the debt cycle. Always find conventional lending possibilities, check loans or credit unions to escape the borrowing trap.
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Although payday loans are prohibited in Georgia, many other loan options are available. If you’re looking for financial assistance, be sure to explore all of your options and always read the terms and conditions before signing any paperwork. Educate yourself on financial literacy, and you will never become a victim of greedy lenders.