California Payday Loan Reviews FAQ
Frequently Asked Questions about California Payday Loan Reviews
- What is a payday loan?
- What are the fees associated with payday loans in California?
- What do I need to apply? How does a payday loan work?
- What if I don't have enough money in my checking account on payday?
- Can I rollover or refinance my California payday loan if I can't pay it back on time?
- If I can't roll my loan over, can I take out loans from more than one lender?
- What is the maximum payday loan I can take out in California?
- Are payday loan sites secure?
- Will a payday loan harm my credit?
- What is a DDO license? Does it matter?
- Can I be prosecuted for failure to pay?
- Why do payday loans get so much bad press?
- Where can I get additional information on payday loans or report complaints about a lender?
- How did NextAdvisor review these payday loan lenders?
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A payday loan is a short-term loan designed to give borrowers a small amount of cash to be paid back on the next pay day.
Lenders in California cannot charge more than $17.64 per $100 borrowed. This is the equivalent of a 459.90% APR, if multiplied over the year.
Customers fill out an online form complete with name, social security number, proof of employment, and checking account information. After submitting the form, an offer is made. When a customer accepts an offer, he/she will receive the amount electronically deposited, usually the next business day. On the customer's next payday, the principal plus the fee will be automatically deducted from the customer's checking account.
The lender is legally entitled to charge you an additional fee, no higher than $15.00 for a "bounced check." Your bank may also charge you fees for insufficient funds.
No, according to California law lenders cannot roll over or refinance your loan. It must be paid back, with the fee, when it's due. This is to protect customers from accruing compounded fees on the same loan.
You can, but we don't recommend it. Payday loans should only be used occasionally, if at all. Getting caught in a cycle of multiple loan payoffs is expensive. For example, customers may be tempted to borrow $100 and think nothing of the $17.50 fee, and then decide to take out a loan from a different payday loan provider to pay back the initial loan. By this time they will have spent $35.00 to borrow $100 twice.
California law limits the amount that can be accepted by a payday lender to $300. Because this amount includes the loan fee, the maximum loan is $255.00 due to the $45.00 loan fee.
It depends on the site. We have confidence in our top-rated sites, but recommend that users avoid doing business with payday loan lenders who operate off-shore, as the one-star lenders we reviewed do. We also recommend that users opt-out of any offers to have their information shared with other lenders or advertisers.
An ordinary payday loan will not be reflected on your credit. Payday loan companies do not check your credit when you apply. Late or unfulfilled payments may have a negative impact, however.
All payday loan lenders operating in California are required to have a DDO (Deferred Depositor Originator) license issued by the California Department of Corporations. The license gives a business the right to hold onto a customer check (or virtual check) and cash it on a specified date. This is how payday loan lenders secure your payment without a credit check. If you deal with an unlicensed lender you will not have the same protections.
No. Under California law you cannot be prosecuted or threatened with criminal prosecution for failure to pay. You can, however, be reported to a collection agency.
Compared to other forms of debt, the APR is high. Also, many consumers take out multiple loans, meaning they start to accrue a large amount of fees. This is particularly true in states where refinancing is legal. However, since other forms of debt aren't available to everyone, occasional, responsible borrowing with a reputable company is ok. After all, the fees are typically less than bounced-check fees or late fees from credit card companies. It's important for customers to be realistic about their finances. If you're continuously taking out payday loans to cover bills, you should consider credit counseling.
We looked at each lender's website and looked for essential information such as availability of contact information, and we looked at how clearly the terms were spelled out and whether they were within the law as we understand it. We researched each lender's Better Business Bureau score to get an idea of their customer service practices. We also checked the website of the California Department of Corporations to see if each lender was currently licensed and whether there was any legal action taken against the companies. While we believe we've been thorough, we always recommend potential customers read all the fine print carefully before engaging with any financial service.
Disclosure: NextAdvisor.com is a consumer information site that offers free, independent reviews and ratings of online services. We receive advertising revenue from most of the services we review. Our editors thoroughly research and whenever possible test each service we review and offer their honest opinions about each one. We are independently owned and operated and all opinions expressed on this site are our own.