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How Many Payday Loans Can You Have In Alabama?

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3 min read
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Payday loans, also known as cash advance loans, are short-term loans typically used by borrowers to cover immediate financial needs until their next payday. In Alabama, regulations surrounding payday loans are governed by the Alabama State Banking Department.

Here are some key points about payday loans in Alabama:

  1. Loan amounts: In Alabama, borrowers can obtain payday loans up to $500. However, the loan amount cannot exceed 25% of the borrower's gross monthly income.
  2. Loan term: The payday loan term in Alabama can be between 10 and 31 days. However, renewals or rollovers are not allowed, and a mandatory cooling-off period of one business day is required between two consecutive loans.
  3. Maximum finance charges: Lenders in Alabama are permitted to charge a maximum finance charge of 17.5% of the loan amount. For a 14-day loan of $100, the finance charge would be $17.50.
  4. Annual Percentage Rate (APR): The APR for a payday loan in Alabama can reach as high as 456.25%. It is essential to consider this high APR, as payday loans are meant to be short-term solutions, not long-term loans.
  5. Limit on concurrent loans: Alabama law prohibits borrowers from having multiple payday loans at the same time. Lenders must check a statewide database to ensure the borrower doesn't have an existing loan before granting a new one.
  6. Borrower eligibility criteria: To qualify for a payday loan in Alabama, borrowers must be at least 19 years old, have a steady source of income, provide proof of identification and residency, and have an active checking account.
  7. Consumer protections: The Alabama State Banking Department is responsible for regulating payday lenders and addressing any complaints or issues related to payday loans. Lenders are required to provide borrowers with written loan agreements detailing terms, fees, and repayment obligations.

It's important to note that while payday loans can provide quick access to funds, they often come with high interest rates and fees. Borrowers should carefully consider their financial circumstances and evaluate whether alternative options, such as budgeting or seeking assistance from other financial institutions, would better suit their needs.

How Many Payday Loans Can You Have in a Year in Alabama?

There is no specific limit on the number of payday loans a person can have in a year in Alabama. However, Alabama has regulations in place to limit the total amount of loans a person can have at one time. A borrower can only have a maximum of $500 in payday loans at any given time. Additionally, there is a cooling-off period of one business day after a borrower pays off or terminates a payday loan before they can obtain another loan. These regulations are in place to protect consumers from excessive debt and borrowing.