State Governments have been fighting back against outrageous payday loan interest rates by capping interest rates on loans. This has been seen most recently in Ohio, as well as Arkansas, New Hampshire, Oregon and the District of Columbia. All have limits on the interest rate payday lenders can charge on payday loans.

This has been the case after Congress limited interest to 36 percent for payday and car title loans to military families last year.

The Federal Government stated, “payday lending threatens the quality of life of military families and combat readiness of servicemen and women”. This is why payday loan and car title companies are outlawed near military bases.

The interest cap rate of 28% is a big change from the original limit of 391%. The change will limit profits for lending companies and some may even stop lending all together.

Another interesting fact is that the law extends loan terms from 14 days to 31 days, mainly to help those who only receive income once a month (social security). This way the borrower who lives off a monthly income does not have to pay two or more loan extension fees.

Payday loan borrowers need to make sure that they do not borrow more than they can handle. If the loan amount taken out is too large, it won’t be able to be paid off come payday, therefore getting the borrower caught in the typical payday loan trap. The fact that the government is stepping in and limiting interest rates and protecting borrowers is a step in the right direction.

VIA

The Payday Loans Act of 2008 has just been passed in the province of Ontario.

What it means: More regulation of the payday loan industry in Ontario and better protection for consumers.

The Act requires:

1. That payday lenders be legally licensed


2. That Payday Loan Lenders include all charges borrowers are required to pay in the total cost of borrowing. This is good for borrowers so they are aware of all costs and no unknown fees will come about.


3. That Lenders allow borrowers to cancel payday loan agreements during a “cooling-off period”


4. That Payday Loan Companies contribute to a public education fund on payday lending.

What’s next: An advisory board is getting together to determine a cap on interest rates of payday loans. This set limit will be included as part of this law and all lenders will be required to comply with the new law.

Ontario is now the 6th Canadian Province to put in place legislative measures to regulate the payday loan industry.

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New restrictions are in place for the payday loan industry. A bill in Ohio was recently passed that will put new limits on payday loans. The law, which is effective September 1, 2008, would limit the allowable annual interest rate on payday loans in Ohio to 28%. This is a pretty low rate if you are familiar with payday loans and their outrageous APRs.

Payday lending offices usually charge about $15 for every $100 borrowed on a two-week loan, which comes out to an annual interest rate of 391%. The bill also means a borrower is only allowed four payday loans per year, with a maximum loan amount of $500, much less than the current limit of $5000. Obviously this bill would put a nice dent in the payday loan industry in Ohio.

This bill may be overall good for Ohio citizens from a financial point of view. Yes, it may take away a credit option for those in need, but payday loans contribute to poor management of personal funds because people continue to take out new loans to pay off old loans and borrowers find themselves caught in the payday loan trap.

While a borrower should have no more than one or two payday loans (if any) at the same time, sometimes the payday loan trap gets us into binds like this. It may be very difficult to pay off multiple payday loans at the same time. If this is the case with you, you may want to consider consolidating your payday loans. By consolidating payday loans you will save drastically on fees and it combines all of your advances into a single more manageable loan. This is sort of similar to consolidating your credit cards as it helps (for the most part) borrowers pay off their debt easier.

It is highly advised against getting more than one or two payday loans at the same time. Those who are already have done this to themselves and it is too late, as they have found themselves caught in the payday loan trap, should consider consolidating payday loans to make things more manageable, and if more loans are needed in the future, borrowers should consider other options besides payday loans.

Making that wallet filled with cash from payday to payday can be one of the hardest things for many people. Here are some practical tips on how to budget your money and make it last until the next pay day.

In order to provide a solution, the problem should be identified first. The first step in budgeting would be the identification of your present spending habits and patterns. This will consist of the common or regular things you buy, reason of purchase, total amount spent for each item bought and frequency of every purchase. This can be done by taking note of the purchase and completing the list every end of the day.

After you have recorded your prevailing spending habit for a week, the next thing to do is to evaluate it. You can talk to yourself as if you are another person criticizing and analyzing your spending habit record. This may be quite weird but this will effectively make you realize what can be done to improve your spending behavior. You are also encouraged to ask other people whom you trust to help you assess your record. This can be your spouse, parents, relatives, or close friends.

Now that you recognize what needs improvement and change, you have to work on a plan and set goals. One of the serious mistakes of other is that they structure their goal or plans in a negative tone, making it so hard to follow. Be optimistic! Always emphasize the benefit of your plans and goals so you can focus on the positive side rather than thinking of the sacrifices.

Action speaks louder than plans. It is true. Execute your plan and stick to it whatever happens. It may be painful while you are beginning but believe me, the results would be worthy of all the sacrifices you have made.