District of Columbia loan laws

Nowadays, it is really tough for people to make their monthly payments. Life is getting more expensive and with that, the bills get higher. Whether you have a steady source of income or not, taking care of all expenses may still be a pretty hard task. And, of course, there is always the possibility for an emergency that emerges unexpectedly and so you will need to deal with that too.

Many times, the money you have is simply not enough

Many times, the money you have is simply not enough

Many times, the money you have is simply not enough. Which is why many people use the services of the loan lending industry. While taking out financial assistance from friends and family is a viable option for some, to others, the only way to deal with such tricky financial situations is by taking out a loan. There is a big variety of loans and with plenty of options for borrowers to choose from, it can become quite hard to find the type of loan that best suits your needs.

With that being said, however, there is a certain loan type that is commonly used by the majority of borrowers in the US and that is the payday loans. However, each state in the United States has its own loan law regulations governing the loan lending business. Even though payday loans are probably the most popular type of loans out there, they are not available to customers in every state.

This is mainly due to their extremely high interest rates and fees, which sometimes make them quite dangerous for the people who use them. Below, we will look at what the loan law regulations in the District of Columbia are, and are payday loans available to the residents of this state.

Are payday loans legal in the District of Columbia?

District of Columbia payday loan laws

District of Columbia payday loan laws

Mainly due to their extremely high interest rates and fees, payday loans in the District of Columbia are considered illegal by the Amended District of Columbia Code that governs the functionality of all small loan lenders in the District of Columbia. If a borrower takes out a small loan in the District of Columbia, an AOR cap ensures that the borrower will not have to pay more than 24% interest. This percentage is significantly lower compared to the annual percentage rates that most payday loans across the country have. Because of that, payday loan lending companies do not want to conduct their business in this state. You must not forget that if you want to apply for any type of line of credit or a loan, it is extremely important that you read all the terms and conditions of your loan contract carefully before signing it. You should also be absolutely sure that you are able to repay the loan you are about to take. Otherwise, you would end up owing a lot more than you have taken. And while payday loans are not available to borrowers in the District of Columbia, there are still some alternatives for the residents of the state to choose from.

Installment loans

Installment loans

Installment loans

With installment loans, the borrower is required to repay the money with a set payment (installment) at the end of each month over a scheduled period of time. There are loan lending companies that offer such loans even to borrowers that do not have a perfect credit score, as long as they are able to show proof of a stable monthly income that will allow them to repay their installment loan on time. Much like with payday loans, installment loans have rather high interest rates and so they can also be quite dangerous if not handled right.

Personal loans

In order to be approved for a personal loan from a traditional loan lending institution like a bank, or another reliable loan lender, you would need to have a pretty good credit score. If, however, your credit score is not that good, you may still have some other options available to you. Personal loans have lower interest rates than payday loans and installment loans and their repayment plans can be quite flexible as well.

Other payday loan alternatives in the District of Columbia

Even though payday loan lending is not legal in the District of Columbia, there are still some options that borrowers who are in need of financial assistance can choose from:

  • CREDIT CARDS

Credit cards

Credit cards

Regardless of your credit score state, there are numerous credit card providers who can get you what you need. Compared to payday loans, credit cards have lower interest rates and more reasonable payments.

  • CAR TITLE LOANS

With car title loans, you use the title of your vehicle as collateral to get a certain amount of money. If you fail to repay your loan, the loan lender can repossess your vehicle. So you need to be completely sure that you can make your payments, otherwise, you will be putting your car at risk.

  • TRIBAL LOANS

Tribal loans

Tribal loans

Even if you are a resident of the District of Columbia where payday loan lending is not legal, you may still be able to get a payday loan by using the services of a tribal lender. Because such loan lenders are based on tribal land, they are able to operate by their own laws.

  • PAYDAY LOANS FROM ANOTHER STATE

If you are currently living in the District of Columbia but  are a resident of another state where payday loan lending is considered legal, you can apply for a payday loan online. In order to do this, you will need to provide certain documentation proving that you are actually a resident of another state. You also better make sure that the online lender you choose to work with is backed by the OLA.

  • GET A SECOND JOB

If taking out a loan is not a viable option for you, you can always try to find a second job to manage your monthly expenses.

Installment loan benefits

Installment loan benefits

Installment loan benefits

Unforeseen expenses are a common setback to most people’s financial status. These expenses include emergency medical bills, outrageous home bills and taxes or unexpected car repairs. They may leave you with no option other than to seek for financial aid from other sources. This drags you slowly into debt. It is imperative that you consider your choices and the lending companies that you choose to work with. Keen scrutiny expects you to note down critical components that constitute a loan. These include the repayment period of the loan, its interest rate and other aspects that are important to you.

Luckily, there are various alternatives available for you to choose from. Installment loans are among these choices. An installment loan refers to a loan which is to be repaid over a given period of time in installments. The repayment period may vary from a few months to as long as 30 years.

There are different types of installment loans out there. They include auto loans, personal loans and mortgages. Installment loans have certain merits that outweigh their demerits. That is why most people prefer installment loans to other forms of traditional borrowing such as payday loans.

Why you should use Installment loans

 

  • No credit checks installment loans

    No credit checks installment loans

    Speed: Most of these installment loans, if approved, will be transferred to the borrower’s bank account on the same day or the next business day. Direct lenders of installment loans do not ask for a lot of documentation, hence speeding up the processing time.

  • Interest Rates: Installment loans have lower interest rates than other alternative traditional forms of borrowing such as credit cards and payday loans. This makes Installment loans more reliable and appealing to borrowers. Low-interest rates reduce the total cost of repaying the entire loan. Most of these installment loans also have fixed interest rates. This keeps borrowers at ease as they need not worry about an increasing interest rate.
  • Flexibility: Compared to other loans, installment loans come with more flexibility. Generally, installment loans are long term. With a long loan tenure such as over 15 years, it is obvious that monthly payments will also be lower and easier to make.
  • No credit checks installment loans: Most people who are deep in debt are already experiencing difficulties in making full repayments within the agreed time frame. This is bound to hurt their credit score. Someone who has taken up bankruptcy, for instance, and defaulted in payment may be subject to a lower credit score. A low credit score scares away potential lenders who fear that you would not make payments promptly.

    Direct lender installment loans offer a flicker of hope for borrowers as they do not have credit checks as a requirement for eligibility. Their interest rates are also fixed, hence enabling borrowers to apply for installment loans with bad credit.

Payday loans vs installment loans

A loan refers to money borrowed by a debtor from a creditor that is to be paid back at an agreed time at an agreed interest rate. There are different types of loans for the borrower to choose from depending on which type suits his financial circumstances best. These loans include car loans, payday loans, personal loans and consolidated loans. Most of these loans are considered installment loans since the borrower pays the lender back in scheduled monthly payments. Borrowers should understand the differences between payday loans and installment loans to know what loan works best to their advantage.

Payday loans

 

 short-term unsecured loan

short-term unsecured loan

A payday installment loan is also referred to as a payday advance. It refers to a short-term unsecured loan that is given to a borrower where he is expected to make payments on his next payday. Payday loans are usually associated with high interest rates as compensation for creditors who face dangers of the borrower defaulting repayments. The creditor cannot perform collection activities if the borrower does not make payment as payday loans are of an unsecured nature. Hence, they do not require you to put up property as collateral.

Payday loans have a simple but expensive application procedure which. It involves you writing a personal check for the amount of money you want to borrow. You are also expected to pay a certain amount of money for borrowing as application fee. Payday loans take a very short time to be processed. Borrowers receive their funds in their checking account electronically, fast enough to meet their immediate financial needs. Lenders of payday loans ask for few verifications which make qualifying for payday loans quite easy. Payday loan lenders require verification of employment or income which is determined through recent paystubs and bank statements. This financial information acts as a guarantee that the borrower is in a position to make repayments.

Online payday loans offer consumers fast application and upon approval the funds are deposited directly into the borrower’s checking account. The repayment procedure involves financial charges being withdrawn electronically on the borrower’s next payday. Payday loans come with certain advantages that appeal to many borrowers.

Advantages of payday loans

 

Payday loans are easy to get

Payday loans are easy to get

1.Easy to get: Payday loans do not involve tiresome procedures and complicated requirements. This makes it easy for borrowers to get a loan. The basic requirements are quite simple and the lender only requires you to have a stable job and a recurring income to qualify.

2. Fast to get: Most payday loans are transferred electronically into the borrower’s checking account. Upon filling out an application form and having your loan approved, you will have the cash you need really fast.

3. Convenience: Payday loans are convenient as they are readily available. Payday loan companies are located throughout most cities. Availability of online payday loans has made it easier for all borrowers to access this loan online.

Disadvantages of payday loans

 

Payday loans can harm your credit score

Payday loans can harm your credit score

1. They are expensive: This is a major reason why most people shy away from payday loans. Interest rates of a payday loan are extremely high which is linked to the risk faced by the creditors if the borrower defaults payment. Application fees are also charged to borrowers which makes borrowing a payday loan expensive.

2. Payday loans can harm your credit score: As payday loans are expensive, borrowers are often burdened by this high cost. So they may delay in making payments which would adversely harm their credit score.

Installment loans

 

Installment loans considered to be less risky

Installment loans considered to be less risky

An installment loan is a type of loan where the principal amount and interest are repaid back in scheduled payments known as installments. Compared to payday loans, installment loans are considered to be cheaper and less risky.

Installment loans are either secured or unsecured, depending on the type of installment loan. Mortgages and car loans are secured where the borrower is expected to put up his house or vehicle as collateral to get the loan. Personal installment loans, on the other hand, are unsecured and their borrowing is based more on the borrower’s creditworthiness and proof of income.

Advantages of Installment loans

 

do not have credit checks

do not have credit checks

1. Fixed interest rates: It is quite distressing when you wake up to hiked interest rates. Some traditional forms of borrowing have varying interest rates which would in the long run, thereby increasing the borrower’s sum of repayment. With fixed interest installment loans, your payments remain the same since its interest rates are fixed right from the beginning. You know exactly how much to pay every month. With this knowledge, you can budget your finances carefully so that you can make repayments promptly every month.

2. Longer terms: Long term installment loans can be as long as 30 years. During this period, the borrower can spread out their repayments over the loan term at his or her convenience. This makes installment loans more flexible than other short-term loans.

3. Easy and fast to acquire: Once you have applied for an installment loan and it is approved, you can get the money when the lender deposits the funds directly into your checking or saving account. Qualifying for an installment loan is very simple. The borrower has to meet the minimal age requirements of 18 years and older. You should also have a recurring income source. You must also provide a valid checking or savings account where you can receive your funds.

4. No credit checks: Some installment loans do not check the borrower’s credit score. Borrowers with bad credit or no credit can borrow payday installment loans.

Installment loans disadvantages

 

Risk of losing property

Risk of losing property

1. High Interest rates: Due to the fact that interest rates for installment loans are fixed, some lending companies may take that opportunity to charge outrageous rates. This would adversely increase your loan repayment amount. With the help of an installment loan calculator, you may avoid this pitfall. The installment loan calculator estimates for you the monthly payments and interest rates you are required to pay for the type of loan you choose.

2. Risk of losing property: There are installment loans that require borrowers to put up a collateral in order to secure a loan. In the event that he delays repayment, the creditor has the legal right to call for collection activities. In the long run, the borrower could lose his collateral.

Differences between payday loans and installment loans

 

Difference B/w payday & installment loans

Difference B/w payday & installment loans

Both payday and installment loans are associated with high interests and they can be easily available without subjecting the borrower to any credit checks. Despite their similarities, they also have their differences.

1. Payday loans are unsecured while installment loans can be both secured and unsecured depending on the loan type.

2. Payday loans are short-term loans that should be repaid on the borrower’s next payday. Installment loans provide longer term borrowing of up to 30 years.

3. Payday loans are paid using a post-dated check. For installment loans, lending companies electronically withdrawn or the borrower pay using a check every month.

4.  Payday loans have extremely hefty interest rates that may be as much as 390% whereas an Installment loan can only go up to about 90%.

How to choose the best loan for yourself

 

There are certain things you should consider before deciding on the type of loan to use. These include:


Interest rates

 

choose loan with lower interest rate

choose loan with lower interest rate

It is imperative that you choose the type of loan with a lower interest rate. This is because with a higher interest rate, you may end up paying much more in the long run which may force you to take out another loan to repay the former one. Installment loans have considerably lower interest rates compared to payday loans.

Effect on your credit score

 

Both types of loans may have a negative effect on your credit score if you delay in making payments or in the event that you default. However, making your installments on time every month can help repair your bad credit score. Payday loans, on the other hand, do not improve your credit score.

Repayment preferences

 

Payday loans are short-term loans. This means they have faster maturity dates and you are expected to repay the loan within a short time, usually by your next payday. Long-term installment loans can take up to 15 years, hence allowing you to plan manageable repayment schedules. This makes installment loans more flexible compared to any other forms of short- term loans. Get an installment loans calculator and see what you are missing on!

10 Things you need to know about installment loans

When facing financial constraints, most people may be forced to approach lending companies. They may not have carefully thought about whether they may end up losing more or sinking further into debt and even hurt their credit score. With the current economic situation, there are various forms of lending which are out there to make profit. Borrowers should be careful not to borrow from such companies to avoid regretting the poor choice they made. Borrowers need to have better understanding and knowledge of the type of loans they want to take out. There are certain things you need to know about installment loans before deciding whether they are suitable for your financial needs.

  • What is an installment loan?

Installment loans are repaid in scheduled payments

Installment loans are repaid in scheduled payments

An installment loan generally refers to any type of loan that is supposed to be repaid in scheduled payments known as installments. Installment loans relieve the borrower of the burden of having to repay a whole lump sum at one go like other types of loans such as payday loans.

  • Installment loans can be secured or unsecured

There are various forms of installment loans such as auto loans, mortgages and personal loans. These loans are both of a secured and unsecured nature. Mortgages and auto loans are typically secured loans. In both cases you put up your house or car as collateral in return for a loan. In the event that you default in payment, the lender has the legal right to sell your house or car to recover the outstanding amount.

Personal loans, on the other hand, are unsecured. This means to apply for a personal loan, the creditor does not require you to put up any property as collateral. Instead, the creditor checks your creditworthiness which is determined by your credit score and proof of income which guarantees that you are in a position to make repayments in the future. Installment loans are more flexible as they allow borrowers to distribute payments throughout the loan term.

  • Requirements for application

Requirements for application

Requirements for application

Before applying for an installment loan, you need to meet a few set requirements to secure this loan. These requirements include: minimum age legal age of at least 18 years. Secondly, you must reside in the state you choose for your loan option so you cannot approach a lender in Ohio when you reside in Colorado. If you are applying for online installment loans, you must provide your social security number and a saving or checking account. That is because upon loan approval, your funds will be transferred directly into your savings account. Upon meeting these requirements, then you are eligible for an installment loan.

  • You do not have to be employed to get an installment loan

Most people shy away from loans as some of them require you to provide a letter from the employer as proof of employment. Installment loans relieve you of such pressure. With an installment loan, you do not need to be employed as long as you have a steady source of recurring income. This guarantees the lender that you are in a position to make scheduled repayments (installments) throughout the loan tenure.

  • Additional fees  

It is always important to consider the cost that you are likely to incur while applying for a particular loan before you even start the application process. When applying for installment loans, make sure you’ve checked the interest rates and other fees such as application fees and processing fees.

  • Installment loans have fixed interest rates

Installment loans have fixed interest rates

Installment loans have fixed interest rates

Very often, borrowers suffer from rising interest rates. Some traditional forms of borrowing have varying interest rates such that they end up paying more in the long run. This makes it even expensive for the borrower such that he/she may delay in making payments which could adversely have a negative effect on the credit score. By providing fixed rates, installment loans give borrowers a golden chance to budget their finances over the repayment period, hence keeping them more at ease.

  • Installment loans improve your credit score

Borrowers strive to maintain a clean credit score for future borrowing. A good credit score opens up avenues for borrowing and somehow acts as a guarantee that the borrower cannot default in making repayment. There are forms of traditional borrowing which could hurt your credit score if you are late in making payments or if you default altogether. Installment loans improve your credit score with time. With every payment or installment made, your credit score improves. Borrowers with bad credit therefore can redeem their creditworthiness. Installment loans have no credit check.

  • Installment loans do not have credit checks

do not have credit checks

do not have credit checks

For those who are haunted by a low credit score, installment loans offer a ray of hope to them. Borrowers on this bumpy road of bad credit installment loans can apply for bad credit installment loans from installment loan direct lenders who do not check your credit score but transfer your funds directly to your bank account.

  • They are fast

Installment loans with bad credit are tailored for emergency situations such as unexpected medical bills, funeral expenses or car repairs. Installment loans transfer funds to the borrower’s account on the same day or on the next business day. Application of an installment loan also does not require a lot of documentation, making the loan processing much faster.

  • Installment loan companies

This is a very important aspect to consider before applying for an installment loan. Borrowers should carry out research to ensure that they are dealing with a licensed company. Rogue lenders are on the rise nowadays and borrowers need to be more vigilant. The borrower should ensure that the lending company is licensed by the state before borrowing from them. Direct lender installment loans are the most preferred option.

Payday loans vs installment loans

There are many different types of loans for borrowers to choose from. Car title loans, mortgages, consolidated loans, payday loans, personal loans and loans from insurance policies are all examples. Many of these loans are considered installment loans because the borrower pays the lender back in scheduled monthly payments. A payday loan is usually made in one repayment amount by the borrower’s next paycheck. That’s the main difference between any type of installment loan and a payday loan. However, is one better or worse than the other?

  • What is a payday loan?

What is a payday loan

What is a payday loan

Payday loans are a relatively new invention that came into existence in the early 1990s. Originally, payday lenders began exclusively as small shops where borrowers could visit them personally to apply for quick cash. Today, while those physical shops still exist, many payday loan transactions are done online from the comfort of one’s very own home.

Taking out a payday loan is one of the fastest and best ways to get instant cash. No matter what your emergency is, applying for a payday loan will get you the needed amount of money in no time. Since the service is really fast and easy to get approval for (you usually get no credit check payday loans), payday loans have very high interest rates which are higher than conventional bank loans. That’s because payday loan lenders take a risk in not seeking collateral from borrowers, only asking for basic personal information and lending money to applicants with bad credit. With payday loans, the borrower usually borrows an amount of money that he is confident of  repaying on his next payday. Being late in repayment will result in hefty penalties.

  • Payday loans advantages

There are many advantages of payday loans.

1. Very easy to obtain

Just about anyone with a stable job can apply for a payday loan.

2. Really fast

All you have to do is fill out an application and in a few minutes, you will be approved and have the cash you need. The loan amount can also be transferred to your bank account.

3. Very convenient

Payday loan companies are located throughout most cities and are really easy to find. Nowdays, there are many online payday loan services. This means when you are ready to take out a loan, there is always going to be one available somewhere near you.

4. Always a last resort option

When there seems to be no way to get out of a difficult financial situation  payday loans are always there as a last resort option. Since their terms are relatively lenient, payday lenders will provide instant cash  even when no other options are available.

  • Payday loans disadvantages

It’s expensive

It’s expensive

There are a few downsides to payday loans that are worth considering before taking out a payday loan.

1. It’s expensive

The interest rates of a payday loan are known to be some of the highest. For many borrowers though, the convenience and speed of being able to obtain money with a fast payday loan when it’s needed is enough to make up for the high interest rate that comes with one.

2. Scams

There are some scam lending companies, so it is important to know you are dealing with a qualified and legitimate lending company before taking out the loan.

3. Borrowing can become cyclical

It’s important that you do a careful financial planning to prevent lagging behind on your repayments. It’s easy for you to fall into a debt cycle that only gets worse over time.

  • What are installment loans?

installment loans?

installment loans?

An installment loan is a loan in which the principal and interest are repaid in equal installments at scheduled intervals (usually monthly). Installment loans are considered to be less risky and cheaper to borrow than payday and title loans. The repayment terms of an installment loan can be as short as a few months or as long as 20 years. Installment loans are usually secured by the personal property of the borrower.

Installment loans have been around much longer than the 90s. They were initially offered only by small, independent lenders, but eventually were adopted by most major banks.

installments at scheduled intervals over an agreed period of time.

Installment loans typically grant borrowers much larger amounts than payday loans. For $1,000 to $10,000, borrowers can approach installment lenders for a loan to pay off recurring bills, home mortgages or medical expenses.

Installment loans are usually repaid over a long period of time which can be as long as 30 years. When taking out an installment loan, the borrower must use a lending institution that operates in the same state where he is staying in as all installment loans are serviced locally.

Similar to payday loans, you can get Installment loans for bad credit or installment loans with no credit check at all.

Installment loans are fast as they take only one business day for the money to be deposited into the borrower’s bank account.

  • Installment loans advantages

Similar to payday loans, there are a lot of installment loan advantages such as:

1. Predictable monthly payments

When you take out an installment loan, there is a fixed interest rate. Your payments will always be the same because the interest rate is already set up at the time when you take out the loan. You will know exactly how much to pay every month.

2. Longer terms

The repayment terms of an installment loan can be as long as 20 years or even more.

3. Easy and fast

It’s very fast to get your hands on the money when you take out an installment loan. Usually, you can get the money deposited directly into your account in just a couple of days after being approved for the loan. Otherwise, you may get the loan amount in cash.

  • Installment loans disadvantages

There are some disadvantages in installment loans that are worth careful consideration before signing up for one:

1. High interest

Even though the APR (annual percentage rate) of an installment loan is not as high as that of a payday loan, it’s still going to be high. After making the payments in full, you can even end up paying more than you would with a payday loan.

2. Penalties for missed payments

If you fail to make your payments on time, it can cost you a lot more than you thought.

3. Personal property risk

There are types of installment loans that require you to put up your personal property as collateral.

  • Payday loans and installment loans differences

Payday loans and installment loans differences

Payday loans and installment loans differences

Both payday loans and Installment loans are considered to be “high-cost, small-dollar” loans. Usually, they come with high interest rates and are extended to people with rather imperfect credit scores or with a specific income level. Even though the two types of loans are similar, there can be some big differences too.

1. Payday loans range from $100 to $1500; installments loans range from $150 to several thousands of dollars.

2. Payday loans are short term and are to be paid back within 30 days. The shortest tenure for installment loans are a few months.

3. Payday loans are repaid through a post-dated check; installment loans are directly withdrawn or paid using a check each month.

4. Payday loan’s APR can be as much as 390%; APR on an installment loan ranges from 25 to 100%.

5. Payday loans are unsecured; installment loans are usually secured but can be unsecured too.

6. Payday loans can be rolled over when it’s due (plus new fees); installment loans can be renewed every few months (with additional fees and interest).

  • Which loan should you get?

There are a lot of things to consider when deciding