Massachusetts Payday Loans

Payday loans are short-term loans that are typically due on the borrower's next payday. They are also known as cash advances or deferred deposit loans. Payday loans are illegal in Massachusetts, according to the state's Small Loan Act . This law prohibits lenders from charging more than 23% interest and $20 in administrative fees for loans under $6,000 . Any loan that exceeds these limits is void and unenforceable. Therefore, consumers should avoid any lender that offers payday loans in Massachusetts, whether online or in person. Payday loans are often predatory and can trap borrowers in a cycle of debt. They also have high rates and fees that can make them very expensive for consumers. The average annual percentage rate (APR) for payday loans in the US is 391%, according to the Consumer Financial Protection Bureau. This means that a borrower who takes out a $500 payday loan and pays it back in two weeks would pay $75 in interest and fees. In contrast, a borrower who takes out a $500 personal loan with a 23% APR and pays it back in six months would pay $67 in interest and fees. Payday loans are not worth the risk or the cost for Massachusetts consumers. There are other alternatives available, such as credit cards, personal loans, payday alternative loans from credit unions, or assistance programs from local agencies or charities. These options can help consumers meet their short-term financial needs without falling prey to illegal and harmful payday loans.