Hawaii is a state that has a total population of about 1,288,198 citizens. Besides its large population, the state of HI has serene physical features such as beautiful islands that enable tourists to experience volcanic lava flows.
Hawaii also offers its citizens payday loan systems. A payday loan is basically a short term financial loan that is given in order to cover the monetary expenses of the borrower until during the next pay day. Such a loan is sometimes regarded as a cash advance.
In Hawaii, legislation regarding payday advance contained in the Financial Service Providers Code of Conduct for Payday Advances. The Act provides that any financial institution taking part in payday lending must disclose the details of the cash advance transaction to the borrower at the time of lending.
The contract that is entered into between the customer and the financial institution must set out in detail the total cost of the service fee for the transaction. This amount must be expressed both as dollar amount and an annual percentage rate (APR).
The legislation prohibits lenders from charging rates and fees for cash advances that have not been authorized by the federal law of Hawaii. In addition, Financial Service Providers Code of Conduct for Payday Advances prohibits lenders from advertising the various cash advance services in a misleading or untruthful manner.
It upholds the guideline for truthful and clear advertising regulations that are contained in the Hawaii Federal Truth In Lending Act. Customers who seek to acquire a payday loan in Hawaii are granted the right to rescind the contract entered into with the lender.
However, such a right can only be exercised before the close of the business day that follows. Lenders under the Act are mandated to use only legally authorized methods while collecting sums that are due from the borrower.
The lenders are prohibited from charging punitive or excessive charges when borrowers fail to repay the loan. Lenders who extend a payday loan in HI are under a duty not to threaten the borrower with criminal suits for failing to repay the cash advance.
Instead, lenders are required to recover the sum using better systems such as withdrawing payment from the customer’s account. The Act provides that the lender is under a legal obligation to advise the borrower on the nature of the payday loan.
To this end, the lender must inform the borrower that the cash advance is only a short term loan that is supposed to be used in settling short term financial crisis. In addition, lenders are required to inform the borrowers about the availability of counseling services for their credit concerns.
In order to ensure that the borrowers put the cash advance to good use, the lenders are under to educate borrowers about the appropriate use of the extended credit, importance of saving and proper use of the cash advance.
Lenders are under a duty to operate within other laws that govern payday services in Idaho and to also uphold standards that guarantee optimal performance of payday services in the state.