Articles - Alabama Payday Loan Facts

Residents of Alabama can take out payday loans quite easily thanks to the large prevalence of lending companies that deal in these types of loans. If you are planning to apply for an Alabama payday loan then it's vital that you know the guidelines and rules that the state has set to govern all payday loans. Each state in the US has its own specific laws regarding payday loans in addition to the general laws that are uniform to all states. Most of these laws ensure protection of the borrower and clearly define the legality of payday cash advance loans within the state.

As per the law, duration of the pay day loans must be between 10 and 31 days. The maximum amount one can borrow is restricted to $500 while there is no limit set for a minimum loan amount. The law also requires a lender to offer the borrower different repayment options in case of default or inability to repay the loan. This is usually in the form of an extended repayment period. However, this option should only be exercised as a last resort. Repeatedly falling back on this option can lead to an unending debt cycle for the borrower.

The law also states that the maximum interest rate that a lender can charge on an payday loan is 17.5%. Each of these laws is geared towards ensuring borrower protection and is followed strictly throughout the state. The law also requires compliance to rules framed for borrowers. You must be a resident of Alabama and must have lived in the US for at least 5 years. A stable source of monthly income is a must and it should be at least $1000 a month. Finally, you need to hold an active checking account with a bank or must possess a SSN account.

Once you fulfill the above criteria then you can apply to any payday loan lending company. The paperwork is usually at minimum and the loan is approved normally by the next business day after which the money is deposited in your bank account. Applying for an Alabama payday loan online is also possible through the internet. This method involves zero paperwork and loan disbursement is faster as well. With online application, borrowers can also shop around for the best interest rates among different payday loan companies. Payday loans can prove to be your best alternative during a cash crunch provided if you don't misuse it in the long term.