Legal Loansharking: How Georgia Regulates Payday Loans
Loansharking is an illegal practice where unlicensed lenders extend credit to borrowers at impossibly high interest rates and then use threats and actual violence to collect. A slightly more respectable version of this practice is commonly called a payday loan. These are small consumer loans for short terms at exorbitant interest rates. Payday loans are controversial throughout the country, and many states have taken steps to protect consumers from them. Here, in Georgia, payday loans have been largely illegal for 60 years, but consumers continue to be victimized by this type of predatory lending.
The Georgia Industrial Loan Act of 1955 required that payday lenders be licensed and registered with the state. It also placed strict limits on the amount of interest a lender could charge. In 2004, with passage of the Payday Lending Act, the state assembly increased fines and criminal penalties for lenders charging illegal interest rates. Currently, a lender cannot charge more than 10 percent in annual interest on a loan of $3,000 or less.
Unfortunately, unscrupulous lenders still find ways to lure unwary consumers into illegal loans. Additionally, a legal loophole allows out-of-state lenders to issue loans to Georgia residents according to their state’s laws. Such loans could carry annual interest rates of up to 400 percent.
Anyone who is tempted to enter into a payday loan should take a cold, hard look at their finances. If the risks of getting deeper into debt outweigh the benefits of a quick cash infusion, it might be time to call DebtStoppers. Our experienced bankruptcy attorneys can put a stop to harassing collection calls and put you on the path to a clean financial slate. To schedule a free consultation, call DebtStoppers today at 678-673-2142 or contact our office online.