A quick guide to payday loans in Alabama
If you live in Alabama and are in need of a payday loan, you might be wondering how they work and what sort of laws are in place to keep you safe from predatory lenders. Our guide has everything you need to know about state laws and regulations.
Get a convenient payday loan, installment loan or line of credit with fast funding, depending on your state of residency.
- Loan Amount: Varies by state
- Turnaround Time: As soon as 1 business day
- Simple online application
- No hidden fees or paperwork
- Dedicated customer service
- Confidential and secure
Can I get a payday loan in Alabama?
Yes, payday loans are legal in Alabama and governed by state statute 5-18A-1 et seq.. The laws are the same for both storefront locations and online lenders, and lenders are required to have a valid license when operating in Alabama.
The maximum amount payday lenders are allowed to offer is $500 with a maximum APR per $100 of 456.25%. Terms vary between 10 to 31 days, and you can rollover your loan once.
More regulations upcoming
Because payday loans are marketed for people in poverty and those same people have to keep coming back to borrow money–often to pay back their original loan–Alabama lawmakers are considering limiting the number of loans lenders can give per year. This isn’t set to change for another few years, but keep an eye out: hopefully these limits will help protect consumers from predatory tactics in the future.
Payday lenders available in Alabama
Check to see if a lender operates in your state of residence.
What should I consider before getting a payday loan?
Payday loans can be dangerous if you aren’t prepared for the fees that come with them, but if you have an emergency and need a little extra funding, a small loan can sometimes be the difference between paying for something you can’t afford–like a car repair–or having to invest a lot of time and money into a bigger problem later on. As with all lines of credit, be sure you can repay what you borrow before you sign a contract.
If you’re just struggling to handle bills, Alabama programs like the Alabama Department of Human Resources Food Assistance Division, Alabama Medicaid Agency, Low Income Home Energy Assistance Program (LIHEAP) and Debt Reduction Services Inc. can help you meet your everyday obligations.
What will I have to pay for a loan?
Whenever you borrow money from a payday lender, you can expect to pay high interest. They may also charge you a fee for a late payment or extending your loan.
- Financing fees: Payday lenders in Alabama can charge 17.50% of the loan in financing fees. The maximum charge for a 14-day $100 loan cannot exceed $17.50.
- Non-sufficient funds (NSF) fees: A lender can charge you a $30 NSF fee if there are insufficient funds in your account when it cashes your check or attempts to withdraw the owed amount from your bank account.
- Default fees: A lender can charge 3% per month if you default on the loan, beginning on the date of default.
- Loan extension fees: You can extend your payday loan with your lender once. You might have to pay a fee for the new deferred transaction.
- Collection fees: Lenders can charge court costs as well as reasonable attorney’s fees limited to 15% of the check’s face value.
Common application criteria
Eligibility criteria will differ between lenders, but the list below will help you determine if you should apply.
- You are at least 19 years old
- You are a US citizen or a permanent resident
- You have a steady source of income
When going through the application, you’ll likely have to provide some personal information, including your Social Security number and details about your bank account. Have these and other documents (such as your ID) close when applying to make sure the process is quick and easy.
If you live in Alabama, a payday loan could be the difference between a huge emergency and being able to make it to your next check. While they have high costs, the laws in place will help you avoid trapping yourself in a cycle of debt. Always be careful when taking on a loan, and be sure you consider your other options before agreeing to a loan contract.