Vermont Payday Loans

Small loan act applies. Vt. Stat. Ann. tit. 9 § 41a. Loans based on checks held for future deposit banned by 8 V.S.A.§ 2519(a)(13)
Status: Prohibited

Payday loans are prohibited in the state of Vermont, pursuant to Vt. Stat. Ann. tit. 9 § 41a.

Payday Loan Lending Laws in Vermont

As of February 2017, there are no payday loan centers operating in the state of Vermont. There are laws preventing companies from using percentage rates in the 3-digit range, and the maximum interest rate on payday loans currently stands at 18 percent. The state has long-standing laws requiring non-bank lenders to be properly licensed and enforces limits on the annual interest rate for unsecured loans, going as high as 24 percent.

In May 2012, the state Legislature enacted a law requiring lenders who fail to comply with lending requirements and those who process electronic loan payments directly liable under the Vermont’s Consumer Protection Act. The law imposed direct liability on any person or business that knowingly and substantially assisted illegal lenders. Any company in the state claiming to offer payday lending services is doing so illegally.

What is a payday loan?

In basic terms, a cash advance loan refers to a short-term financial loan, usually between $100 to $500, that has to be paid back within a short time frame. As the typical timeframe rests within 14 days, the repayment deadline tends to coincide with biweekly pay schedules, resulting in the loan’s name. Due to the easy application process, payday loans have become popular in other states in recent years. A borrower only needs to be a U.S. resident over the age of 18 and have access to a bank account. Unlike traditional loans, payday loans do not require a potential borrower to produce collateral or have a good credit rating to apply, although application does not guarantee approval. Depending on the state in question, a borrower might also be able to take out multiple loans with different lenders.

The application process itself also generally takes only a few minutes, which adds to the appeal; a borrower in need of fast money to handle a financial emergency can apply and be approved in less than 30 minutes. The ease of the application process, coupled with the lack of requirements as to how a borrower can use the loaned funds, adds to the popularity of cash advance loans. The funds dispersed through payday lenders also do not carry any usage requirements; they can be used for anything the borrower needs. However, as with any financial loan, the borrower should take care to understand the loan terms and have a plan to pay the funds back before agreeing to the lender’s terms.

Loan Options

Although current state law prohibits payday lenders from operating in Vermont, state residents do have options available, the best example being online loan applications. Online loan companies operate on a similar business principle as credit card companies. Although a creditor may operate out of one bank headquartered in one state, they can do business with anyone wishing to use their services throughout the country. A borrower can find a referral website, enter the information on the loan they seek, and wait to see if they are approved. Borrowers should consider every possible option available to them in times of financial hardship before considering such loans.

Lending Rules*

Lenders in the state of Vermont are legally required to comply by the following limitations according to Small loan act applies. Vt. Stat. Ann. tit. 9 § 41a. Loans based on checks held for future deposit banned by 8 V.S.A.§ 2519(a)(13):

Small Loan Rate Cap:
18% per year
*The information displayed may not be current. For the most recent information, please visit http://www.paydayloaninfo.org/state-information/53.

Regulatory Information

If you have a complaint against a Vermont Cash Advance location you can contact your state regulator below:

Regulator:
Vermont Banking Division
Address:
Department of Financial Regulation, 89 Main St., Montpelier, VT 05620 - 3101
Phone:
(802) 828-3307
Fax:
(802) 828-3306
Website:


Vermont Statistics**

The following information is key demographic data for the state of Vermont from the Census bureau.

Total Population:
624,594
Median Household Income:
$55,176
Poverty Rate:
10.2%
Median Gross Rent:
$895
High School Graduate or Higher:
91.8%
Bachelor's Degree or Higher:
36.0%
**The information displayed may not be current. For the most recent information, please visit http://www.census.gov/quickfacts.

Borrow Responsibly

Short term loans should function like band-aids; they can be used best to handle a problem just until a better long-term solution can be found. Short-term loans should never be used for long-term financial planning or anything other than an emergency situation; doing otherwise can put the borrower in a financial situation that can prove very difficult to escape. The very nature of emergency situations can make it difficult for a potential borrower to do the proper research and ask the right questions about a payday loan before agreeing to the terms, but that does not free the borrower from the responsibility they take one when they accept a lender’s terms.

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