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Pay Day Loans in Montana

Payday loans are a form of short term money lending service. Where, an individual is given a sum of money not exceeding a certain amount on condition that they will repay the money when they get their next pay check.

The duration of the loan is usually two weeks or less. An individual is usually lent the money upfront, with no securities required. The only thing that is required is a pay slip for one to prove that they have a steady source of income, hence their ability to pay back the loan. And a checking account.

The client is usually required to write a postdated check. So that on the agreed date of repayment the lender can be able to withdraw the cash from the borrowers’ checking account. Which means in case the check bounces, the individual will incur bounced back check expenses on top of the loan they are supposed to pay.

The main disadvantage of this form of money borrowing is that the interest rates are very high. They can be as high as 900%. That is why the various stakeholders in MT financial industry came up with various rules and regulations to control the industry in October1999 under the Montana Deferred Deposit Act. In Montana, pay day loans are also referred to as delayed deposit loans, cash advance loans or postdated check loans.

Cash advance loans in Montana are legal. Payday loan MT agents usually lend out $50 as the minimum and $300 as the maximum amount inclusive of fee charges. The maximum time limit for repayment is 31 days. The finance charges cannot be more than 25% of the amount of money borrowed. These charges are required to be written down in the agreement as a dollar amount and as a percentage amount which is usually referred to the Annual Percentage Rate (APR). The APR in Montana is 650% though this varies from one trader to another. Hence, it is advisable for one to shop around for a suitable APR rate. The APR rates are high since there is no security provided by the lender. A borrower cannot borrow more than 25% of their net income per month.

There are two ways one can apply for payday advance loans in Montana. One when the lender gives the borrower the money and in return accepts a check which is written on the day of the transaction. The check reflects the amount of money borrowed plus the finance charges. The check is dated on the date that it was written. For instance if Mary wants to borrow $ 200, she will write a check for $220. $20is for finance charges. The second method is that the borrower writes a postdated check to the lender with the full fees. The lender agrees to hold on to the check until the day of payment. The lender has the option of buying back the check. If they don’t buy back the check the lender will deposit the check into their account and access the money from the borrowers’ checking account.

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