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Payday loans in Maryland
19 Dec 2019
Everything you need to know about payday loans in Maryland.
What is a payday loan?
A payday loan is a short term loan. The usual amount is calculated from a percentage of your short term expected income, most likely your monthly wage. Hence the term payday loan. The term derives from the idea to get the loan immediately and pay it back the moment you receive your paycheck.
In reality the term is used or all kinds of short-term loans unrelated to someone’s paycheck. Other terms commonly used to describe the same type of loan are cash advance loans or check advance loans
What are the benefits of a payday loan?
The obvious benefit is that you will receive the money you needed immediately. There can be several reasons why you immediately need the money. It can be an amazing investment that you have to invest in immediately, but most of the time people need a payday loan, because they cannot pay urgent bills that are due or because they really need money to buy food for their family.
So it is common you need a payday loan when in financial trouble. A payday loan can relieve you from short term worries about a financial situation.
What are the downsides of a payday loan?
Payday lenders are known for charging very high interest rates. The worst examples have even reached 500% annual percentage yield (APR). On top of that payday lenders are known for charging extra fees besides the interest. A known danger is that people can get caught in a circle of debt paying one payday loan with another payday loan. In the meantime you will lose a lot of money on the high interest you have to pay month after month
Is a payday loan legal in Maryland?
No, in Maryland every form of a payday loan is strictly prohibited. Even online lenders are not allowed to give a payday loan to residents in Maryland. The risk of borrowing money and the notorious practices of payday lenders in the past made the government decide to make this business illegal by law.
Does this mean that any form of getting a short-term loan is impossible in Maryland? Luckily this is not the case. The government of Maryland does understand the benefits of short-term loans for its residents. In Maryland short-term loans do exist, but only institutions with an official license from the state government are allowed to provide this service. All licensed institutions have to abide to the strict rules of the Maryland government
- The maximum interest for the first $1.000 is 2.75% per month or 33% per year on a loan of $2.000 or less.
- The maximum interest for the second $1.000 is 2% per month or 24% per year on a loan of $2.000.
- The maximum interest for every loan larger than $2.000 has a maximum interest of 2% per month or 24% per year for the total amount.
How do I apply for a short-term loan in Maryland?
This is pretty easy. Online providers usually ask you to fill in a form with personal data and some financial information. The form will be checked by the lender. When you fulfill the requirements of the lender your request will be accepted and the money will be sent to you.
How to choose a payday lender in Maryland?
Make absolutely sure the lender has an official license provided by the state government of Maryland. If the lender cannot provide an official license the practice of lending is illegal. Stay away from these lenders. You can even report them at the government of Maryland. If the lender has an official license they will conform to the rules of Maryland and you can safely proceed.
How to repay a payday loan?
The rules to repay the loan are part of the agreement you sign with the lender. A payment schedule or due date for the full amount are regular in these agreements. By far the most important, is that you should be absolutely sure you are able to pay back the loan, without needing a new loan. A short-term loan should be a one-time action and not a loop you will get stuck in.
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