Like many states Hawaii has had the payday loan industry in place for several decades allowing anyone to obtain a payday loan.
Unfortunately the state does not have an overall high income and many areas are poor so the state is finding more and more people are using payday loans for one reason or another.
One of the most common reasons people are using these payday loans is usually a financial emergency has popped up and they dont have the extra money to cover it.
Nevertheless, consumers are being taken advantage of when they take out such a loan. And that often puts individuals in a situation of being unable to repay the loan and they end up getting into even more financial trouble before getting the payday loan.
Yes these loans are easy to obtain and can solve that financial emergency but there are many reasons why consumers must be careful about such loans, specifically the interest rates.
Payday loans often require a large amount of interest to be paid on the debt within just a couple of weeks. When factored out over a year, the APR (annual percentage rate) is often in the triple-digits.
What Are Payday Loan Laws in Hawaii?
H.C.R. 172 provides authorization to lenders to provide payday lending services to consumers in the state of Hawaii.
The following are some of legal aspects to the process.
The maximum payday loan term is 32 days.
There are maximum fees and finance charges in place, which is 15 percent of the borrowed funds.
It is not possible to rollover the payday loan to another period by the lender. It is also not possible to consolidate such loans as they stand.
Individuals are only allowed to have one outstanding loan at a time.
The maximum amount to lend is $600.
As mentioned earlier the key here to consider is the actual APR (annual percentage rate).
Most loans are for two weeks. If you take the 15 percent face value of the check amount (the principle loan amount) and multiply it as an annual percentage rate, the rate is in the triple digits.
Its these triple digit rates that are lining the pockets of the payday lenders at the expense of the customer.
As well as causing many users of payday loans getting caught in what is known as the payday loan trap a trap that is very difficult to get out of if you dont know what options are available for getting out of the payday loan trap.