Payday loans are a useful, but frequently misunderstood, form of emergency financial aid. These short term loans are provided with different means and legal restrictions in each state. In Nevada, the restrictions are much less strict than most other states. However, there are legal limitations and best usage methods for reasons to acquire these loans. First, it is important to know exactly what a payday loan is, and should be used for when compared to different short term loans.
What is a Payday Loan?
The most important thing to remember about payday loans is that they are generally meant to be repaid within a very short period of time. The name of the loan is derived from the old practice of borrowing money until your next pay period. In short, you are borrowing money against your next paycheck.
The actual practice of payday loan lending can vary extensively, however. In some states, such as North Carolina, they are banned outright due to predatory lending practices that had been practiced in that state. However, in other states the restrictions are quite few in number. The general practice involves either postdating a check, or granting the lender access to your bank account in the form of an automatic withdrawal on a specific date. Typically, that date will still be on your next pay period.
There are a few important terms to know about when looking for a payday loan, such as fees and interest rates. However, the most important term to know about is known as rollover. Concepts like fees and interest are fairly common, but rollover refers to the action of rolling a loan over to a new pay period. If a loan is going to default, or has defaulted, the remaining monies owed can be paid during a new payment period. However fees and interest will be applied. The fees and interest charged will vary from state to state, and by individual lending companies.
How Does a Payday Loan Work in Nevada?
Nevada has one of the least restrictive payday lending policies in the country. While many states try to heavily enforce a maximum ceiling on the amount of money that can be borrowed, Nevada has opted out of a hard ceiling altogether and allows for loans equal to up to 25% of the monthly gross income of the borrower. There are other important factors to consider.
- The borrower can have more than one concurrent loan at one time.
- The lending institution is not regulated in regard to fees and interest rates charged unless the loan is in default.
- If the borrower defaults on the loan, the maximum amount of the interest chargeable is 10% more than the largest Nevada bank charges for their prime interest rates.
- Criminal action cannot be taken against a borrower who has defaulted on their loan unless criminal intent can be proven, such as using a closed bank account to acquire the loan.
- The maximum period of time allowable for payday loan repayment is designated as 35 days. However, the maximum repayment period can be extended to a ninety days if the lender and borrower have opted to use an installment repayment plan.
- While there is no specified number of rollovers allowed, the lender cannot extend a repayment period more than sixty days. This would mean that a shorter term loan, such as a two week loan, might be rolled over an additional four times, while a longer term loan might only be rolled over once.
The payday loans lending concept is a solid, time-tested, method of acquiring money quickly. If you have a sudden emergency, or have a need for money today when you won't be paid for another week, this is the loan for you. If you are capable of borrowing only what you need, and repaying the debt on time, this sort of loan can be a great tool in your financial tool kit.Share