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Are payday loans legal in Oklahoma?

Meeting financial challenges can be difficult for a Tulsa resident living from paycheck to paycheck. Some people have resorted to taking out payday loans to meet the demands on their income caused by medical debt, emergency repairs on a car or home, or other unexpected events.

Payday loans are easy to obtain for a borrower because they do not require collateral. All a borrower needs is a job and a checking account. A person in need of quick cash simply writes a check to the lender for the amount borrowed plus interest and fees in exchange for the principle amount of the loan that is usually deposited directly into the borrower's checking account. On the repayment date, usually coinciding with the consumer's next payday, the lender deposits the check.

Although they are legal in Oklahoma, payday loans are regulated by the state in an effort to protect consumers from predatory lending practices such as high rates of interest and exorbitant lender fees and costs.

State law limits the amount maximum amount of a payday loan to $500, and prohibits a lender from requiring repayment in less than 12 days or more than 45 days from the date of the loan.

Interest rates and fees that lenders may charge are capped under state law. On loans up to $300, the maximum interest charge cannot exceed $15 for each $100, but the rate decreases to $10 for each $100 borrowed on loans exceeding $300 up to the $500 maximum. What many borrowers might not realize is that a $100 loan for two weeks with a $15 interest charge equates to an annual percentage rate of 391 percent.

As with other forms of credit, payday loans may serve a purpose; but a consumer can quickly become overwhelmed and end up searching for a way to eliminate debt.

This posting offers some information on the topic, but it is not intended to be relied upon as legal advice. A law firm knowledgeable in bankruptcy law can be a good resource for advice on how to obtain a fresh start.

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