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Business Loan Understanding Payday Loans: Why they are not available in Hume, New York
Payday loans are short-term loans that help individuals bridge financial gaps between paychecks. These types of loans are also known as cash advances or cash loans and are typically due within two weeks or on the following payday.
However, in the state of New York, payday loans are prohibited. The New York State Department of Financial Services (NYDFS) explains that “payday lending is illegal in New York under both civil and criminal statutes.”
What Are the Regulations Surrounding Payday Loans in Hume, New York?
The NYDFS prohibits any lenders from operating or engaging in the activities of making, arranging, or brokering payday loans in-person or over the internet. Even online lenders that operate outside of Hume, New York, are not legally allowed to offer payday loans to residents in the area. Any lender that violates the law can face severe penalties.
As a result, Hume, New York, does not have any payday lending storefronts, nor can residents access payday loans online through any lenders.
Why Are Payday Loans Prohibited in Hume, New York?
The state of New York has implemented measures to protect consumers from predatory lending practices commonly associated with payday loans. One of the primary reasons payday loans are banned is due to their high-interest rates, which can be as high as 400% or more.
Additionally, payday loans can lead individuals down a debt trap spiral, where they must take out more loans to pay off the original balance. With no end in sight, borrowers can end up owing significantly more than they borrowed in the first place.
Interesting Facts and Statistics About Payday Loans
- On average, payday loan borrowers have 10 payday loan transactions per year.
- The typical payday loan borrower ends up paying $793 for a $325 loan.
- Around 80% of payday loans are rolled over or renewed within two weeks, leading to repeated fees and interest rates.
- Payday loans are most widely used by individuals earning less than $40,000 a year.
- In 2018, the Consumer Financial Protection Bureau proposed new rules to regulate payday loans and other types of high-interest loans.
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