Supreme Court Allows the Alabama Banking Department to Restrict Loan Amounts
Need a short-term loan in Alabama? Your options are about to get limited. Alabama’s Supreme Court ruled in favor of a bill that forces residents of Alabama to borrow no more than $500 when using a short-term loan product like car title loans or payday loans. Any lender must now create a database system that tracks how much a person borrows and share that information with the state, this includes any loans taken out through an online lender.
The state feels that payday loans and other short-term loan products are predatory. Generally, those who end up in trouble with payday loans are people who did not understand the terms. Always make sure you understand the terms before you accept the loan.
What This Ruling Means for You
If your car breaks down and you’re told the transmission needs replacing, something that costs well over $1,000 usually, you’re going to have to find a new way to come up with all of the cash. This is devastating to people who need the cash in a day or two, not weeks or a month or two later.
Traditional bank loans can take weeks to go through underwriting and then disbursement of funds. If you have poor credit, it’s unlikely a bank will approve the loan anyway. If you need the cash immediately, you’re going to have to find alternate ways to get the cash you need. Otherwise, you'll have to go without your vehicle for a longer period of time while you save up for the repairs.
What You Can Do
If you are in an emergency situation and need a payday loan in Alabama, the best thing to do is start approaching your church, friends, or family and see how much you can borrow from them. After that, an Alabama payday loan or other short-term loan product can help you fill in any gap.
There is Hope
Advocates of payday loans and other Alabama short-term loans have hope that things might change for the borrower’s benefit. A new regulation is being heard by the Alabama Senate. If this passes, borrowers will be able to borrow as much as they need, but instead of paying back the loan after a week or two, borrowers will instead have up to six months for repayment. With the longer payment terms, the goal is to reduce the interest rate and fees borrowers pay with short-term loans.