Pay Day loans are a twentieth
century innovation. These loans have a peculiarity in that they have a direct
connection to your monthly salary, hence the name pay day loan. Another
innovation as we shall say is that these loans are almost without any strings
i.e. they are free in a way as no guarantor, mortgage or collateral is
involved. This by itself is a big boon. The financial world has accepted these
loans and there is no dearth of people who will disburse such loans. However
all good things may have a rider. Pay day loans also have a rider in the form
of the loan being for small amounts and also its availability to only those
Americans who have a regular source of income. So in case you are unemployed than
you may be out of the ring to avail a payday loan. But in case you are a
salaried man or woman and you need cash real bad, then a pay day loan may be
the answer for you. A second rider exists in the form of high interest which
you may have to pay to avail this type of loan. You can't get away from it as
this is an unsecured loan and the financial world has accepted it as a
supplement to the financer who gives a loan at a greater risk without
collateral.
Loans and all financial transactions
do come under the purview of the law makers. Hence Pay day loans are also under
the scanner and some regulatory laws have been framed. The United States is an
association of states. Certain laws are under state jurisdiction and certain
under federal control. As far as these short term loans are concerned they are
state subject and no federal law exists to regulate them.
But there is one exception to this
scenario and that concerns pay day loans for members of the United States armed
forces. In their case Congress has framed laws regulating the APR that can be
charged to a service man. US Congress by an act in October 2006 has capped pay
day lending for military personnel to 36 %.
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