Walk It Through: The Payday Spiral
A payday loan, a change of heart, a request to roll it over, and a check that bounces.
Short before payday, a worker writes a check to a payday lender for cash now.
Two things a person in this spot might do. Picking one shows what the law says about it.
One worker's month. Installment lenders, credit cards and bank overdraft fees are not worked through here.
A practice walkthrough, not a prediction of how any real one will go. Legal information, not legal advice.
Words this turns on
Terms with a legal meaning that is narrower than the everyday one. Each links to the definition and the authority behind it.
- UsuryContracting for or taking interest above the sixteen percent ceiling where no other section allows more. The lender then recovers only the principal, without interest.
- ChargeA written charge under oath filed with the Equal Opportunity Commission within three hundred days after the practice.
- Delayed deposit transactionA payday loan, where the lender holds the borrower's check. The annual percentage rate may not exceed thirty-six percent, and no check is held more than thirty-four days.