Here’s what you need to know about payday loans in Connecticut.
Being short on cash is like being stuck between a rock and a hard place, and you might be considering a payday loan. Take a look through this guide to get a good idea about payday lending in Connecticut.
Can I get a payday loan in Connecticut?
No. Payday loans are illegal in Connecticut. The General Statutes of Connecticut 36a-563 et seq. apply to all small loans. There is a cap of 12% in place on the total interest a lender may charge, effectively making payday loans illegal. These laws were put in place to protect consumers due to the predatory practices of many payday lenders in the past.
Keep in mind that if you choose to apply for another type of loan or a line of credit, you should examine the loan contract carefully and have a budget in place to pay back what you owe. Otherwise, you may fall into a debt trap similar to that caused by a payday loan.
How else can I get a short-term loan in Connecticut?
If you’re in need of money with a fast turnaround, a short-term loan is probably what you’re looking for. Personal loans with higher amounts could take days to get approved and up to two weeks to receive the funds.
Another option for borrowing a small amount of money in a pinch is to go through a loan connection service. These providers work to find a suitable lender that’ll offer you a loan that abides by states laws and still meets your needs. An installment loan may be the solution to your problem. All loans under $10,000 are required to have an interest of 12% max. So be sure your lender is offering this to you in your contract before you sign.
A selection of loan connection services to compare
Tribal lenders under strict regulations.Tribal lenders in Oklahoma have recently brought up claims that Connecticut’s cap on interest at 12% violates their sovereign rights. Since lenders aren’t allowed to charge more than this under Connecticut’s usury laws, tribal lenders are effectively banned from offering payday loans in the state. These laws are in place to protect consumers, and the legal battle is still unsettled as of October 2017.
For now, consider all payday loans in Connecticut illegal–even if they’re offered by an online tribal lender.
What other options do I have if I need extra cash in Connecticut?
Although payday loans aren’t an option, there are other alternatives. Here are four alternatives to payday loans in Connecticut:
- Settle your debt. If you have multiple loans at high interest rates and are struggling with high monthly payments, consider working with a debt settlement company to come up with a payment plan and possibly pay less than you originally owed. Although our article focuses on getting out of a payday loan debt cycle, these services information does apply to any debt you may be in.
- Create a budget. Determining how much you make and how much you spend each pay period is one of the easiest ways to find out where you’re losing money. A budget will help you get your financial life in order.
- Contact your creditors. Lenders are in the business to make money, and many are willing to set up payment plans in order to make it easier for you to pay off your debt. Negotiate a lower monthly payment and remember: it’s better to make small payments than to make none at all.
- Local assistance. You may also want to apply for the Connecticut Food Stamp Program or Winter Heating Assistance Program so you can lower the cost of food and energy bills while you pay for other bills, whether unexpected or not.
Important considerations before you apply
All forms of credit come at a cost to the consumer. In addition to interest rates based on your credit and origination fees, you may have to pay other charges depending on if you miss a payment or default on your loan.
Borrowing safely involves budgeting for the total amount of your loan, which includes the principal and all the interest. If you know how much you’ll have to pay back, you’re less likely to fall into more debt.