Until 2004, Georgia citizens were able to take advantage of payday lending. Payday loans in Georgia were especially popular amongst residents with poor credit in need of fast cash. Payday lending offices are generally not selective about who they loan money to; in most cases, proof of employment and a bank account is enough to secure a small loan. What’s more, people can get the money they need the same day they apply for it. This lending arrangement would seem ideal to just about anyone on the outside, but the reality is that the interest rate on the average payday loan is often as much as 600 percent.
The Payday Lending Act of 2004
The Payday Lending Act went into effect in 2004, and it promptly put an end to all payday loans in Georgia. According to the act, lending offices in the state may be charged with felony and racketeering for charging borrowers excessive interest on small loans, typically $3,000 and under. Penalties for violating the act include fines of more than $20,000 and possibly even jail time. It’s no surprise that most payday lending offices in Georgia closed up shop as a result of the act. Georgia is now one of 19 states in the country that no longer allows payday lending.
Borrowers Nationwide Should Steer Clear of Payday Loans
When people are desperate for money, they often fail to see the big picture. Payday loans appear attractive initially to people with bad credit because they need money and have no other means of obtaining it. Borrowing $100 and being told the amount to pay back is $125 doesn’t seem like a big deal, but then there’s another $20 to $25 in interest tacked onto the balance for every $100 borrowed. There’s no denying this ultimately adds up to a lot of money. People who get into the payday loan cycle frequently end up in more severe financial shape than they were to start with when they only needed a few hundred bucks to pay a light bill or something equally minor. Payday lending isn’t worth it, and the fact that Georgia and other states have now banned the practice confirms this.