If you have less than perfect credit and find yourself in a financial emergency, you might be looking for an alternative to traditional bank loans. A payday loan, or cash advance, could get you through this rough patch, but understanding how these types of loans work is important. This guide will give you the information you need to make your decision. The most important thing to keep in mind is that a payday loan is a temporary fix, not a long-term solution.
Compare a selection of cash advances and short-term loans
Yes, cash advances, also referred to as payday loans, are legal in California. The California Deferred Deposit Transaction Law sets regulations that govern the functioning of all cash advance providers here. Some of the regulations include:
All providers of California cash advances must have valid licenses to operate in this state.
The maximum you can borrow through a cash advance in California is $300.
The maximum loan term is 31 days.
Cash advance providers in California cannot initiate criminal proceedings against borrowers to collect unpaid loans.
What is a payday loan?
A payday loan, also known as a cash advance, is a short-term personal loan (typically $500 or less) that usually must be repaid in full within two weeks to a month. The repayment date is determined by your pay schedule. Because payday loans come with steep finance charges, it is not a long-term solution, but a temporary fix to an unexpected financial situation. Rules and regulations for payday loans vary from state to state, and are even not permitted in some states.
Why you might consider taking out a cash advance in California
Here’s why California cash advance loans continue to remain popular:
Multiple options. When you’re looking for a cash advance in California you get to choose from a range of options. These come in the form of lenders that have physical locations as well as loan providers that limit their presence to the online world.
Bad credit is OK. A low credit score can work against you when it comes to getting a loan from a bank. If you have poor credit, you can consider applying for a cash advance, provided you can demonstrate your ability to repay.
Easy application process. Apply online or in person. In both cases, completing the application should take no more than a few minutes.
Get money quickly. If you submit your application at a store and are approved, you will get the cash you need as soon as you accept the loan’s contract. With online cash advances in California, some lenders transfer approved funds into borrowers’ bank accounts within one business day. Others may require you to wait longer.
What fees can I be charged with a cash advance in California?
If you get a cash advance in California, know that state laws have restrictions in place to protect the interest of borrowers. Here’s what you may have to pay in different scenarios:
Maximum finance rate and fees. The maximum fee a lender can charge is limited to 15% of a check’s face value. The finance charge for a 14-day $100 loan is limited to $17.65. The maximum APR for a 14-day $100 loan is 459%.
Collection fees. A cash advance provider can charge an insufficient funds fee not in excess of $15, and only once. You don’t have to pay any fees for a late payment.
Rollover fees. While a lender may allow an extension or a payment plan, it cannot charge any additional fees or charges.
How do I apply for a cash advance in California?
You can apply for a cash advance online or by visiting a store. In both cases, you have to meet some eligibility criteria, which includes:
You are at least 18 years old
You are an American citizen or a permanent resident of the U.S.
You have a steady source of income
Completing the application successfully requires that you provide this information:
Your name and contact details
Your Social Security number and details from an acceptable form of ID such as your passport or driver’s license
Your employer’s name and contact details
Details about your income
Frequently asked questions
Yes, you cannot have more than one outstanding cash advance at any time.
No, as soon as you repay a cash advance in California you can apply for another one.
You should get in touch with the California Department of Business Oversight.
Aliyyah Camp is a writer and personal finance blogger who helps readers compare personal, student, car and business loans. Aliyyah earned a BA in communication from the University of Pennsylvania and is based in New York, where she enjoys movies and running outdoors.
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