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flythai834
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I recently just read somewhere off the internet that payday loans are illegal in new york state. I have an outstanding payday loan and have used up all 3 extensions, they are expeceted to take out $360 from my bank account. Should I pay this loan, I really dont have the money? what can i do. any info will be greatly appreciated. also, i forgot to mention i live in the state of new york.

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I recently just read somewhere off the internet that payday loans are illegal in new york state. I have an outstanding payday loan and have used up all 3 extensions, they are expeceted to take out $360 from my bank account. Should I pay this loan, I really dont have the money? what can i do. any info will be greatly appreciated. also, i forgot to mention i live in the state of new york.

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I'm not sure if the loan itself is illegal, but under Federal law the wage assignment forms that payday loan stores typically use are illegal. Under the Truth in Lending Act they can't make you sign a wage assignment that gives them the ability to take money out of your payroll without judicial process.

You can block the automatic withdrawl from your bank account by notifying the bank in writing not to allow it. Bank managers generally try to tell you they can't do this but that is false. The Electronic Funds Transfer Act gives you the right to block unauthorized transfers before they happen and get your money back on unauthorized transfers after they happen. Once the bank gets your letter telling them not to honor that electronic withdrawl, they must comply or they have to give you the money back and eat the cost themselves.

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Even if the payday loan was illegal in NY...which I doubt because they wouldn't have a PDLoan store out in the open if it was...you would still have to give back the principal amount you borrowed. If the contract was voided you don't get to keep the funds you borrowed, you just don't have to pay the interest on it.

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I have already paid $180 on interest. From what I believe any company in nys and anywhere else for that matter are not permitted by law to extend payday loans to people who reside in nys. do you think if i just pay the remaining balnce minus the $180 from $300 if that would be ok.

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Well this is what I found:

Payday Lending Is Illegal in New York

• States traditionally regulate the small loan market and license lenders who are allowed to charge relatively high rates to make small loans available to consumers without perfect credit standing. New York's civil usury cap is 16 percent interest a year (New York General Obligations Law § 5-501 and New York Banking Law § 14-a, subd. 2). The criminal usury cap is 25 percent annual interest (New York Penal Law § 190.40). Check cashers are prohibited from cashing checks with deferred dates in New York.

Banks are allowed to export their interest rate to other States. But if you did not get the payday loan from a real bank, they can't charge more than 25% annual interest -- or they violate the usury laws of NY.

Look at your loan docs. If it is a bank, you're probably going to have to pay it. If it isn't, then you stop payments and file a complaint with the NY AG office and the Banking Department for the State of New York. According to some of the stuff I found, the loan is usually nullified in it's entirety and the offending company has to refund all monies paid to the consumer (IOW you keep all the $$ and what they "loaned" to you is what they pay as damages for violating the law).

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methuss,

i must say THANK YOU for taking the time out to check up on the info i posted. i didnt sign any loan documents. i needed cash quickly so i did a search online, found a company called sonic cash llp, i filled out info on the application, gave them my account number and routing number to my bank and from there they deposited $300 into my bank account. so im pretty sure this is not a bank.

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