No Credit Loan Sites See Laws Changing
The fact is that no credit and bad credit quick online loan sites have seen their business expand at an incredible rate over just the past decade. Simply put, more people are using them, and their numbers just keep on growing. So what started out occupying a relatively small market share has grown to what it is today. A major online money lending recourse.
So what has happened is that the laws that govern online lending sites have been forced to play catch-up, and it's all starting in Texas. So why Texas? As it turns out, of all the states in the US, Texas has the largest number of people who visit and borrow money from payday loan sites.
This is because as far as the finance industry and the regulations that govern it are concerned, the state of Texas has a long tradition of being the trend setter for the nation. However, be aware that as of 4-2011 the new laws still haven't passed and been made into law although they are expected to within the year of 2011, and they will be retroactive.
So the first rule to take effect in Texas deals with the amount of money that an online payday advance site can lend to any one individual. The new rule makes it perfectly clear that no loan shall exceed 35% of a borrower's gross monthly income. What this means, is that for someone to borrow $1000 they must bring home at least some $2,700 in pay each month.
One more of these new pieces of legislation deals with the amount of fees that a lender can charge for a no credit loan and it place a cap at 15%. Now keep in mind that this pertains to loan fees not to the amount of interest that can be charged. Now there are also late stage penalty fees that can stack up, but this 15% number only deals with the initial loan fees.
Still one more provision of the new laws, prevents these online bad credit loan providers from threatening their clients with legal action. Now do understand that these sites are protected by laws that guard them from loan fraud for instance. Laws that is still fully enforceable. What this new change does though, is simply prevent the lender from using "threats" of a criminal action.
So what has happened is that the laws that govern online lending sites have been forced to play catch-up, and it's all starting in Texas. So why Texas? As it turns out, of all the states in the US, Texas has the largest number of people who visit and borrow money from payday loan sites.
This is because as far as the finance industry and the regulations that govern it are concerned, the state of Texas has a long tradition of being the trend setter for the nation. However, be aware that as of 4-2011 the new laws still haven't passed and been made into law although they are expected to within the year of 2011, and they will be retroactive.
So the first rule to take effect in Texas deals with the amount of money that an online payday advance site can lend to any one individual. The new rule makes it perfectly clear that no loan shall exceed 35% of a borrower's gross monthly income. What this means, is that for someone to borrow $1000 they must bring home at least some $2,700 in pay each month.
One more of these new pieces of legislation deals with the amount of fees that a lender can charge for a no credit loan and it place a cap at 15%. Now keep in mind that this pertains to loan fees not to the amount of interest that can be charged. Now there are also late stage penalty fees that can stack up, but this 15% number only deals with the initial loan fees.
Still one more provision of the new laws, prevents these online bad credit loan providers from threatening their clients with legal action. Now do understand that these sites are protected by laws that guard them from loan fraud for instance. Laws that is still fully enforceable. What this new change does though, is simply prevent the lender from using "threats" of a criminal action.
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