Payday loans in California are expensive, but so are late fees for not paying bills on time, or fees generated by bouncing checks or electronic debit. For example, it costs about $45 to borrow $255 for two weeks in California. That is indeed very expensive at a 459% APR. However, it's possible to generate over $100 in bank fees from bouncing three checks on top of fees charged by those holding the bounced checks.
To avoid this type of situation, payday advances are available in California. Consumers who need to borrow money with a payday loan can do it online or at a store. However, the limitations imposed by California law on payday advances very restrictive compared to other states. They apply to both online payday lenders on the internet as well as payday loan stores physically located in California.
Maximum Amount for Payday Loan Advances
The maximum amount that can be borrowed in California is $255. The maximum finance charge is $17.65 per $100 loan for 14 days. That corresponds to a maximum APR of 460%. For a $255 loan, the maximum finance charge is $45, which makes the total to be paid back $300. If the ACH debit or check used to repay the loan bounces, the payday lender may charge an additional $15 fee.
Payday Loan Extension in California
Extensions of payday loan advances do not exist in California. Because of state law, all payday advances must be paid in full including fees and interest on the due date. Also, payday lenders in California may not have more than one outstanding loan per borrower. In other words, a borrower cannot get another loan until the first one is paid off in full.
The maximum length of a payday advance in California is 31 days, but it is often shorter than that depending on the loan. Most advances are due on the next payday between 5 and 31 days, hence the origin of the name payday loans. Due to state law, the due date may not exceed 31 days.
These loans are very expensive and California laws exist to protect the borrower. Consumers should look for other ways to borrow money fast such as an auto title loan. It is never a good idea to take multiple payday loans. The interest and fees that accumulate would be far worse than the original bills that were to be paid with payday advances. It is best not to utilize payday loans if the original bills cannot be paid by the next payday.
References:
California Department of Corporations.
California Financial Code §23100 to §23106.
