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Compare short-term loans in Connecticut
There's safer alternatives to payday loans when you're in a bad fix.
Because of the predatory nature of short-term loans, many states have outlawed them completely — including Connecticut. While you won’t be able to take out a payday loan if you live here, there are other options if you’re short on cash and don’t have the best credit.
Compare short-term loans in Connecticut
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Must read: 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.
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.
Can I still get a short-term loan in Connecticut?
Technically yes, although it will likely be difficult. Currently, lenders are prohibited from setting an APR above 12% on loans up to $10,000 in amount. As a result, it will likely be hard for you to find any sort of other short-term loans, such as installment loans.
However, you may be able to find a short-term loan from a tribal lender since they don’t have to follow state payday loan laws. Read our guide to tribal lending to learn more about the risks and benefits before taking out a loan.
Struggling with debt? Other options to consider
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.
What to consider 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.
Bottom Line
While you can’t obtain a payday loan in Connecticut, that might just be a blessing in disguise — you have some other options to choose from.
Read our guide to payday loan alternatives to learn more about the local resources available in your state to get out of long-term debt.
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