Loopholes in Online Cash Advance State Laws

Recently, online cash advance companies have been under major scrutiny, especially in the state of Washington. In 2010, a new state law placed restrictions on Washington online cash advances which caused a large slump in the industry, even casuing some payday lenders to shut their doors permanently. One of the new restrictions was limiting payday loans to 8 per year. If consumers were unable to pay back their debts, an installment plan was offered which guaranteed that lenders would lose money in the 2010 fiscal year. Up to one third of cash advance lenders were put out of business because of this law. Those who were not forced out of business, have found ways to keep their doors open to the public in order to offer them a valuable service. After all, an online cash advance is a small sum of money that is borrowed and paid back when the next paycheck arrives, on average, two weeks. For people who have bad credit and are unable to receive fast cash any other way to pay for their emergency expenses when their cash flow runs tight, online cash advances are extremely important services. Without these serivces, these people will be unable to pay for their expenses, leading them into just as much debt and worse consequences such as losing their job because they are unable to afford their car repair bills or get sick because they cannot pay for their medicine on time. Companies are now giving out gift cards to be purchased that can be used like debit cards. This credit transaction is similar to a payday loan as you pay interest on the amount placed on the card but it is exempt from washington state law. Since lenders are unable to give out loans in a different manner, this is the way that they have found around it. Due to these tactics around washington payday loans, the state legislators are now rethinking the restrictions placed on lenders last year. A hearing will be held to discuss the future of cash advances in the state.

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