Millions of people across the country count on payday advance loans to cover emergencies that occur before the arrival of their next paycheck. Having access to cash, quickly, makes overcoming such unexpected situations much easier to deal with.
However, New Jersey payday loans are considered illegal. The main reason is that the laws governing New Jersey payday advances require that only banks, where residents hold accounts, can dole out loans. This restriction alone keeps payday loan companies from operating within the state.
Low interest rates set by the state also discourage payday loan businesses that rely on charging high interest rates on the rapid, short-term cash loans they provide. Therefore, residents seeking cash advances may have to resort to other means to obtain fast cash to cover unexpected emergencies.
What Exactly Are Payday Loans?
The term "payday" loan defines short-term cash loans that are provided quickly and then repaid quickly, usually between 14 and 31 days or upon the borrower's next payday. Payday advances are relatively easy to obtain, having a very simple application process, and are used mainly to meet emergencies that occur between paydays when cash is short.
Only basic requirements exist to apply for such cash advances such as verifying your personal information and providing proof of employment or some other form of regular income. Payday loan lenders also rarely do credit checks and, therefore, such loans are available to almost anyone over the age of 18, even if they have bad credit.
The Law Governing New Jersey Loans
As mentioned, New Jersey payday advances are considered illegal within the state. There are two strict regulations that prevent most payday loan companies from operating. One hurdle lies in the New Jersey's check cashing law, while the other lies in its interest rate cap.
New Jersey prohibits any bank or company from cashing paychecks of those who do not hold accounts at their facility. Since payday loan lenders use paychecks as collateral for short-term loans,
they cannot operate within the state.
New Jersey also caps the allowable interest rate on any loan at 30 percent per annum. This is another deterrent for payday advance companies since they normally charge interest in the hundreds of percentage points for short-term loans.
Alternatives to New Jersey Payday Loans
If you require cash to cover financial emergencies, there are alternative sources where you can obtain such rapid funding. Following are some suggestions.
First of all, you might find online payday loan lenders willing to provide cash advances. Although they must abide by New Jersey law concerning payday loans, some Internet companies find legal ways around the law and offer legal cash advances to New Jersey residents. However, they must abide by the 30 percent interest cap, not provide more than $2,500 per loan, and they must deny loans to people who have defaulted on three loans within any 12-month period.
If you prefer not to acquire payday loans from online lenders, then you can resort to other alternatives. If your financial situation consists of upcoming due dates on bills, you can contact your creditor(s) and request payment extensions. Most companies will work with you if you are in a financial bind.
You can approach your employer for a cash advance, which is deducted from your next check or ask to work any available overtime. You can also adjust your tax form to add more dependents, which will reduce the tax amount deducted from your checks.
Other alternatives to New Jersey payday loans include performing side jobs, seeking title loans, pawning or selling items, consolidating bills, researching available government assistance programs, or asking members of your family or friends for a small loan.
Information on New Jersey Payday Loan Laws or Other Financial Matters
Additional information on the laws governing New Jersey short-term loans or other matters pertaining to state financial law, contact the following:
- Department of Banking and Insurance, New Jersey
Category: Payday loans