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Business Loan Understanding Payday Loans in Upper Fairmount, Maryland
When people have sudden or unexpected financial emergencies, they sometimes turn to payday loans to get quick cash. However, it is essential to understand how these loans work and the regulations that govern them in your state of residence. This article delves into what payday loans are, how they operate in Upper Fairmount, Maryland, and the legal landscape surrounding payday loans in Maryland.
What Are Payday Loans?
In the simplest sense, payday loans are short-term loans that should help people bridge the gap between paychecks when a pressing financial need arises. A typical payday loan is usually a small amount, such as $500 or less, that comes with significant lending fees.
Payday loans are also called cash advances, paycheck loans, or payday advances. The loans are secured upon the borrower’s next payday, meaning they should be repaid on the borrower’s next paycheck or within a few weeks. Payday loans often attract borrowers with bad credit or no credit at all.
The High Cost of Payday Loans
Despite the advantages of not needing collateral, payday loans are quite expensive for several reasons. First, they usually come with high-interest rates that can accumulate to hundreds of percent in annualized interest.
Second, payday loans have short repayment periods, which can put a lot of pressure on borrowers who cannot meet their repayment deadline. Borrowers may ask for an extension, but authorities usually advise against doing so due to the high-interest rates that accrue over the loan’s life.
Payday loans are often marketed as convenient or easy-to-obtain loans, but in reality, they trap borrowers into a cycle of debt due to their high cost and short-term nature.
The Legal Status of Payday Loans in Maryland
In Maryland, payday loans are illegal, along with other states that have banned payday loans. The law stipulates that payday lending is prohibited under COMAR 09.03.13.06 (B). In Maryland, the maximum interest rate that a lender can charge on a $100 loan of two weeks ranges from $2.75 to $15. However, the cost of similar payday loans in other states ranges from $15 to $30 per $100 loaned.
However, although these lenders are illegal, they are still in operation, and some borrowers may seek out illegal moneylenders. It’s best to avoid such lenders when possible because they charge exorbitant interest rates and often come with additional risks such as losing your car or other collateral.
Interesting Facts and Statistics
- In 2012, payday lenders in Maryland had 85 stores, which cost borrowers over $120 million in interest and fees.
- Each payday lender operating in Maryland pulls in an average of $650,000 in fees every year.
- In 2012, the average interest rate for Maryland payday loans was 398%.
- The average Maryland payday loan principal amount is $300.
- The National Foundation for Credit Counseling receives one call every three years about payday loans.
- 79% of payday loan borrowers opt for reborrowing their payday loans to pay off previous loans.
Applying for a Loan on TheGuaranteedLoans
TheGuaranteedLoans is a reputable third-party loan connector service that facilitates borrowers’ connection to potential lenders. Although TheGuaranteedLoans is not a direct lender, the service helps you navigate the loan market by bridging the gap between borrowers and lenders. By filling out our online application, borrowers can find a lender that suits their needs without having to go through the hassle of searching for one themselves.
Applying for a loan on TheGuaranteedLoans is easy and straightforward. Borrowers fill out an online application form, and if they meet the requirements of the lenders we work with, the lenders will get in touch with the borrower via phone or email with a loan offer. Interested parties can visit our website and get started on their loan application.
Conclusion
Payday loans are prohibited in Maryland, and borrowers should avoid seeking lenders who operate outside the law. It’s crucial to understand the legal landscape surrounding payday loans and make informed decisions about borrowing. As it is with all loans, it’s best to borrow responsibly and only when it is necessary.
TheGuaranteedLoans is a reputable third-party loan connector service that helps borrowers connect with potential lenders without the hassle of looking for a lender themselves. By visiting our website, borrowers can fill out an online application form and receive an offer from lenders if they meet the requirements.