Payday loans in Florida, like any lawful lending, require a formal two-party agreement stipulating the rights and responsibilities of the creditor and the borrower. The contents of such documents vary, so it is in your best interests to read them carefully.
An applicant should make aware of all key details prior to signing on the dotted line. To properly understand all conditions and implications, it is imperative to comprehend the nature of such short-term loans.
A payday loan is defined as a type of cash advance. It is the best option for Florida citizens looking for extra money until their next payday for instance, when dealing with a financial emergency, such as medical bills or other unexpected expenses.
Since these loans are categorized as “unsecured”, borrowers do not need to provide any collateral. What they do provide, though, is either a post-dated check or direct debit permission.
These enable the lender to successfully receive the amount that must be withdrawn from the borrower’s account on the due date – i.e. when their next paycheck arrives.
The key terms you should examine include the following:
- due dates (such loans are repaid once in full);
- amounts to repay (interest rate plus all charges);
- conditions of cancellation;
- conditions of early repayment;
- implications of non-payment;
- complaint procedures.
The dates and amounts are determined by local state laws and thus vary geographically. The later the repayment is, the more expensive the loan, as any new day adds more interest.
Consider the following calculation. On average, each $100 borrowed for a 14-day period will cost $15, which means 15% simple interest rate. However, there is another measure worth mentioning. By the state of Florida law, payday lenders are also obliged to disclose the annual percentage rate.
This determines how much you would pay for a hypothetical one-year loan under the same conditions. This indicator, therefore, is irrelevant for shorter loan arrangements and is normally used for comparison with lengthier and less accessible borrowing options.
Generally, a borrower does have time to cancel the agreement with no penalty imposed. This must be clearly specified.
When canceling, it is not necessary to disclose the reasons. Most commonly, one may cancel by the end of the business day after receiving the funds.
All debit forms and postdated checks are returned to the borrower, while the other party receives the exact amount they loaned.
Your document will also stipulate the implications of defaulting or failure to repay. Here, the loans are very similar to other types of unsecured debt, causing penalties and fees to accumulate. Eventually, criminal prosecution may ensue.
However, your agreement may allow a so-called “loan rollover”. Such an arrangement means that your due date will be extended until your next pay day, while only service fees will be charged.
Rollovers may include special fees increasing the overall cost, but these must be laid out in writing.
In conclusion, when considering lending offers, study the documents thoroughly, as they regulate your relationship with the creditor. A borrower must be fully aware of the details, procedures, and conditions, and extra charges, so that all risks are clear.
As payday lending is a perfectly legal practice in most US states including Florida, the conditions may not violate the law, and your rights are protected as much as the rights of the lending party.