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 loanin Connecticut?
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.
What about installment loans?
If you’re in need of money and want to repay over a longer term, an installment loan may be the solution to your problem. All loans under $10,000 are required to have an interest of 12%, so be sure your lender is offering this to you in your contract before you sign.
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.
- Consolidate your debt. If you have multiple loans at high interest rates, consider taking out a debt consolidation loan. Although our article focuses on getting out of a payday loan debt cycle, the 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.
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.
How much would a loan?
All forms of credit come at a cost to the consumer. In addition to variable 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.