More than five million American families pay checks to payday lenders every year. A payday loan can be considered as an advance payment of your upcoming pay that is given to you for a certain fee. The amount borrowed can range from $100 to $1000, for a high interest fee ranging up to 300% or even more.
In some states, it is easier to find a payday lender than a fast food chain. Usury laws, considered to be the first consumer laws are used to protect consumers from predatory lenders, that charge very high interest rates for a short-term payday loan.
According to the federal Truth in Lending Act (TILA), a payday loan company must disclose the cost of their loans as a fee and as an annual percentage rate (APR). Under the Truth in Lending Act, banks acting as consumer lenders must ensure that accurate disclosures are provided to clients. Usury laws regulate payday loans in 37 states. These regulations specify the maximum interest rate at which loans can be given. Most of the states have usury laws including special usury laws such as small loan acts.