Payday Loans in New York State
The Empire state has payday loans outlawed. However, there are a few unique things about the legislation that does leave state residents a way to get a cash advance in New York.
New York payday loans are regulated by three pillar laws:
- According to New York Banking Law 340 et seq., the law governing licensed lenders applies, however the interest rate is whatever the lender and the borrower agree upon in the contract.
- New York Penal Code 190.40 caps the interest rate that lenders can charge for small loans at 25%.
- New York Banking Law 373 specifies that no lender can make loans and cash money using a post-dated check. There is one exception to the Law though. You can get a payday advance in New York, if the post-dated check is your payroll check.
There are a few things to remember about payday loans (New York):
- There is a cap on the interest rate you can be charged on small loans. The cap is at 25%. Anything above that would be illegal.
- You are still left with plenty of options. Rather than paying a really big interest rate (common for payday loans,) you have a better chance of getting a small short-term loan from your bank, regardless of how bad your credit is.
- It's probably a good thing that payday loans in New York are hardly existent. Payday advance loans have a really high default rate, and there would have been a good (approximately 1 out of 20) chance that your loan would default as well.
Know Your Options
Payday loans in states where they are legal, are extremely expensive. Interest rates on payday loans may vary from 300% to as much as approximately 2000%. At the latter rate, you would have to pay your lender 20 times more, if you kept the money for a year! Not that it would happen, since payday loans are short term, but an APR like that is just too big for an average consumer to handle.
Alternatively, you can just go to your local bank and talk to someone. Explain your situation. A credit history will probably not even be needed. In states, where payday lending is prohibited, both banks and employers are likely to be more understanding when it comes to small loans to individuals with bad credit.
Get It From Your Employer
One sure way to get a cash advance is to get it from your employer. You just get paid ahead of the pay day. That’s how it is going to look. Same as with the bank, you would explain your situation and ask your employer to accommodate your request. After all, payday lending is outlawed, you'll say, and you have no other choice. If you would have gone as far as getting a payday loan, there is little chance that your employer won't understand.
Where To Complain
You would complain to the New York State Banking Department, which is located in New York City.