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Pennsylvania's Loan Interest and Protection Law (LIPL)
Pennsylvania Payday Loan Laws
Regarding high-interest rate, short-term loans made to Pennsylvania residents over the internet.
Pennsylvania's Loan Interest and Protection Law (LIPL) prohibits lenders who are not licensed under the Consumer Discount Company Act (CDCA) from charging an interest rate in excess of 6 percent per year on a loan amount less than $50,000.
It should be noted that many Native American Indian Tribes do initiate consumer loans in Pennsylvania by employing both the Internet and their sovereign immunity per the US federal government.
There are those who refer to this business model as the Native American tribe "rent-a-bank" and "rent-a-tribe" schemes.
Since Internet payday loan lenders have been offering their product to residents of PA for years, Harrisburg is thinking of bringing payday lending back -- with new protections. "It is already easy to take out a payday loan in Pennsylvania because all you have to do is pick up the telephone or go on the computer," said Pa. Rep. Chris Ross, R-Chester Co., the bill's sponsor. Ross' Bill would allow payday loan lenders to charge whatever they want in interest, but finance charges would be capped at 12.5%. Also, if you can't pay the loan back, payday loan lenders would have to offer a long-term re-payment plan. The bill also bans people from taking out one loan to pay off another, often called "rollover loans."
Here's a link to the Pennsylvania Payday Loan Bill: PA Payday Loans
Pennsylvania PA Supreme Court OKs Ban on Unlicensed Payday Loans via the Internet
In Cash America Net of Nevada v. Commonwealth, the Pennsylvania Supreme Court has found that Cash America, an out-of-state lender, that issues payday loans to Pennsylvanians via the Internet without a license is in violation of state law. Cash America, which does not have stores within Pennsylvania, made loans to Pennsylvanians in amounts below $25,000 with charges exceeding 6 percent simple interest per annum.
The PA Pennsylvania Loan Interest and Protection Law caps interest rates on loans less than $50,000 at 6 percent and any entities providing loans in access of that must be licensed in the state to do so. The department's and secretary's attorney said this ruling represented a "significant win for the PA Department of Banking and for the policies the Secretary." "The decision itself is important because it shows that some of these older statutes have vitality when it comes to dealing with the regulatory issues that arise in the age of the Internet," he said.
This Pennsylvania PA ruling is one of severalchallenges payday loan lenders are experiencing as state and federal governments continue to introduce legislation. The structured settlement industry faced this type of scenario in the late 90’s before federal legislation was put into place requiring judicial approval for the sale of any structured settlement annuity to a company that would provide a cash lump sum to the seller.
Pennsylvania Payday loan laws. Pennsylvania Payday loan legislation. Pennsylvania does not have specific payday loan safe-harbor legislation. At this time, the best approach is to offer payday loans via the Internet, one of the alternative methods (cash rebates, ISP model, etc.) discussed in our training materials, or the newest model, the CSO (Credit Services Organization) approach.
Press Release Source: Advance America, Cash Advance Centers, Inc.
Advance America Announces New Credit Product for Pennsylvania Consumers Tuesday June 20, 5:09 pm ET
SPARTANBURG, S.C., June 20 /PRNewswire-FirstCall/ -- Advance America, Cash Advance Centers, Inc. (NYSE: AEA - News) announced today that its subsidiary in Pennsylvania has begun offering consumers in that state a new financial service called the Advance America Choice-Line of Credit. This service allows customers access to up to $500 in credit for a monthly participation fee plus interest on outstanding loan balances.
In announcing this new service, Ken Compton, the president and chief executive officer of Advance America commented, "We are pleased to offer consumers in Pennsylvania another alternative to help them meet their periodic short-term financial needs. The new Line of Credit offering is part of Advance America's ongoing commitment to provide products and services to hard- working Americans who occasionally need additional money and whose needs are underserved by banks, credit card companies, and other traditional financial institutions."
The Company previously operated in Pennsylvania as marketing, processing, and servicing agent for a Federal Deposit Insurance Corporation (FDIC) supervised institution that offered payday cash advances and installment loans. The bank discontinued offering advances and loans in Pennsylvania on March 27, 2006.
The change in Pennsylvania leaves Arkansas as the only state where Advance America still operates as an agent for an FDIC supervised institution. The Company previously announced that the bank has discontinued offering installment loans in Arkansas and intends to discontinue offering payday cash advances in that state on June 24, 2006. The Company expects to begin operating under existing state based legislation in Arkansas in the near future.
About Advance America
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country's leading provider of payday cash advance services with approximately 2,650 centers in 36 states. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices.
Forward-Looking Statements and Information:
Certain statements contained in this release may constitute "forward- looking statements" within the meaning of federal securities laws. All statements in this release other than those relating to our historical information or current condition are forward-looking statements. For example, any statements regarding our future financial performance, our business strategy, and expected developments in our industry are forward-looking statements. Although we believe that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations and the related statements are inherently subject to risks, uncertainties, and other factors, many of which are not under our control and may not even be predictable. Therefore, actual results could differ materially from our expectations as of today and any future results, performance, or achievements expressed directly or impliedly by the forward- looking statements. For a more detailed discussion of some of the factors that may cause our actual results to differ from our current expectations, please refer to the "Risk Factors" section of our Quarterly Report on Form 10- Q for the fiscal quarter ended March 31, 2006, a copy of which is available from the Securities and Exchange Commission, upon request from us, or by going to our website: www.advanceamericacash.com.
Source: Advance America, Cash Advance Centers, Inc.
For a thorough discussion of the payday loan industry and access to our payday loan training materials, we recommend you proceed to Payday and Paycheck Loans.com