Alabama Cash Advance Laws and Regulations
In the state of Alabama, several laws and regulations have been instituted to protect consumers and maintain uniform compliance to Alabama’s lending standards. While Alabama joins many other states in providing strong usury laws for small private loans, court decisions in 2002 declared that payday loans could not be categorized in the same way as small private loans. This has allowed lenders to enjoy more flexibility in their lending practices and has helped usher in the expansion of payday loan sources in the state. As of January 2012, there have been no legislative or regulatory changes to the cash advance industry in Alabama. The chart below details the most up-to-date legislative requirements that currently apply to Alabama payday loans.
Here are some specific Alabama regulations, to protect consumers from predatory lending in the payday loan industry:
- Maximum Payday Loan Term
31 days - Maximum Finance Charges and Fees
17.5% interest per $100, plus $10 origination fee, plus 3% interest to accrue after initial loan period - Maximum Loan Amount
$500 - Number of Rollovers
One - Outstanding Loans Allowed at Once
One per lender - Cool-Off Period
24 hours, but only after second payday loan and only if they were paid in full
- Payment Plan
Voluntary payment plan of 4 equal monthly installments of entire loan balance plus all fees - Collection Fees
$30 NSF Fee - Presentment Limit
One - Private Right of Action
Civil - Military Protection
N/A - Penalties
Arbitration and attorney fees
References:
Alabama Code § 5-18A-1 et seq.
Alabama Deferred Presentment Services Act, Title 5, Chapter 18A
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Consumer Notice: A cash advance, also referred to as a payday loan or payday advance, is a small, short-term loan that is intended to cover a borrower's expenses until the following payday. Cash advances are intended for short-term financial relief and do not constitute long-term financial solutions. Consumers facing debt and credit difficulties should seek out debt and credit advisory help. Consumers are encouraged to consult our State Consumer Resource pages to learn more about the risks involved with cash advances, local laws and regulations that may be applicable to cash advances, possible loan alternatives and recent developments in their state.
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