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Laws for Payday Loans
Legal Status of Payday Lending. Payday loans are small loans subject to state regulation. Traditionally states have capped small loan rates at 24 to 48 percent annual interest and required installment repayment schedules. Many states also have criminal usury laws to protect consumers.
I think it depends on what country you live in. In my country failing to pay a payday loan is not a crime, but the lender can sue for recovery of the debt. In my country the law is largely in favor of lenders. If you fail to pay they can get a court order, without your knowledge and attach your goods. This gives you a week to pay or auction them.
Here's what you need to know about payday loans and the new regulations.

What are payday loans?

Payday loans are typically between $200 and $1,000 and must be paid back when a borrower receives his or her next paycheck.

On average, borrowers incur a $15 fee for every $100 borrowed, according to the Community Financial Services Association of America (CFSA), which represents payday lenders. That's the equivalent of a more than 391% annual interest rate.

Where do you get them?

A patchwork of state laws may limit access in some areas or cap the amount people can borrow. Some states have banned them entirely, according to the National Conference of State Legislatures.

What's the controversy?

The CFPB argues that most customers who take out payday loans can't afford them.

About four out of five payday loan customers re-borrow their loan within a month. A quarter end up re-borrowing more than eight times, according to the CFPB. All the while, they rack up new fees.

Watchdog groups have long labeled payday lending practices as "predatory."

Dennis Shaul, CEO of the CFSA industry group, concedes that some customers do get trapped by payday loans in a harmful cycle of debt -- but it's a small percentage, maybe 15%, he says.

He insists the industry is not out to prey on the financially vulnerable.

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