Good news brewing for the cash advance online industry! Pennsylvania House of Representatives passed a bill to regulate payday loans and cash advances. House democrats voiced their opposition to the bill and for the most part, voted against it, the bill passed with a 102-90 vote.
The bill will now move onto the Pennsylvania Senate. If the bill passes in the present form, cash advance online lenders and payday loan companies will need to obtain a license in order to operate within the state.
Pennsylvania is looking to regulate the cash advance online industry to ensure best practices and protection for its residents.
Limits will be placed on cash advance online loans.
- Lenders will be able to charge 12.5% interest on top of a $5 fee for the short-term loan. If an individual borrows $300, the payoff would cost $342.50.
- Rollovers will not be permitted if the borrower cannot pay at the end of the two week ( 14 day average) pay period.
- The cash advance online industry will be forced to adopt new pay off policies if the borrower cannot pay in full. A payment plan will be offered at no additional cost. The borrower will have four two-week periods in which to pay the outstanding loan balance. This will give a borrower four times the regular pay off time to repay the loan.
- With this new pay off plan, a borrower will be regulated to not have more than two of these types of loans out at any one given time. Without having this regulation, a borrower could still be negatively affected by the cash advance online industry.
- Lenders with physical stores will have limitations on their geographic location possibilities. To ensure there are no predatory lending practices, these stores will not be allowed to open near casinos, racetracks, and military installations.
The proposed regulations within this bill will create a safer loan transaction for borrowers since the cash advance online loan lender will be limited on finance charges, loan amounts and must offer payment option which does not include a rollover.
This bill was backed by some cash advance companies, but not by all. Some companies will not set up shop in Pennsylvania if this new bill is passed. Small limited loans with little finance charge will not be a cost effective investment for many lenders.
The online cash advance industry will prove to have an easier time setting up in Pennsylvania. Companies being licensed without the investment of setting up shop, will fit into the industry’s online accessibility. The rates which loans are set up for right now, at 24%, already have companies complaining about the existing hindered profitability. Once this bill is passed, the existing lender profits will be lowered which may affect existing companies.
Spotya.com cash advance online is happy to see the industry being worked on and offered to more people in order to help them out of small financial troubles. There are successful loan stories each day here at Spotya.com. Applying for a cash advance online does bring positive results to people’s financial situation.
