Payday Loan Laws in Alabama
Payday lenders in the state of Alabama can legally extend single-payment short-term cash advances to borrowers in lieu of post dated checks provided by the latter and which come with a high triple-digit APR. However, payday loan laws in Alabama do impose certain restrictions on the maximum amount of money that these lenders can provide as well as the finance charges to safeguard the interests of borrowers and to prevent them from being trapped in a viscous cycle of debt.
It is important to note that payday loans are not available in every state and laws and regulations vary by state. Information for Alabama Payday Loans is provided for your convenience.
Even though it is legal for payday lenders in Alabama to impose a high APR, the maximum amount of loan that they can offer should not exceed $500. Moreover, if a lender offers a payday loan of more than $500 to a borrower, the latter is not liable to pay any interest or finance charges on the additional amount. To add to it, in the event of failure of the borrower to repay the loan amount due to valid reasons, the payday loan laws in Alabama bar the lender from filing a criminal suit against the defaulter. The only exception to this is when the borrower has sought the loan through fraudulent activity or has closed his or her bank account without notifying the lender.
In case a borrower's account is in collection status and he or she fails to make timely payment, the lender can charge $30 as NSF fee and even add the charge of attorney's fee as well as court costs to it as long as the total amount is not more than 15% of the face value of the check. The payday loan laws in the state also impose a cap on the finance charges. According to this provision, the finance charges cannot be over $17.50 on every $100 of a cash advance that has a term of 14 days.
However, the lender is entitled by law to charge an additional 3% on a monthly basis if the borrower defaults.
Furthermore, payday loan laws in Alabama allow only one rollover thus putting an effective antidote to the vicious cycle of debt and make it mandatory for the lenders to offer an affordable repayment plan. Thus, if a borrower fails in repaying the loan in a single lump sum amount, he or she can request the lender to offer a reasonable repayment plan that breaks down the due amount into several easy monthly installments. The minimum and maximum repayment period for short-term cash advances in the state of Alabama is 10 days and 31 days respectively.
In case, you need more than $500 for meeting a cash emergency, you can apply to multiple payday lenders, as the state law does not impose any limit on the number of outstanding loan accounts that a resident can have at a time. However, it is important to note that as a resident of the state, even if you take cash advances from payday lenders based in another state, payday loan laws in Alabama will still be applicable to you.
Take a look at the benefits of applying for Online Payday Loans if available in your state.
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