Deferred Presentment
and Small Loans (Payday Loans)
Frequently Asked Questions for Consumers
These loans may go by different names such as: cash
advance, check advance, deferred deposit check loans, deferred presentment or
small loans. A payday loan is a short-term personal loan secured by a
borrower's personal check or the borrower's agreement to have the money owed
taken out of their bank or credit union account at some future date (usually 14
days after making the loan).
Under the Louisiana Deferred Presentment and Small Loan
Act, the maximum amount that you can borrow is $350.
Louisiana law allows a lender to charge $20 for every
$100 borrowed, plus a $10 documentation fee. However, the total amount of
the fees cannot exceed $55 when the amount borrowed is $220 - $350.
No. You must completely pay off the payday loan
before you can make another loan. However, if you pay the fees and repay
25% of the amount you borrowed, you can refinance the remaining 75% of the
amount you initially borrowed, but you will be charged additional fees based on
the remaining balance owed. For example, if you borrowed $100 with $25 in
fees and you cannot repay the entire amount on the due date, you can pay the $25
fees plus an additional $25 (25% of $100) for a total of $50 and refinance $75
(75% of $100). The additional fees to refinance the remaining balance of
$75 would be $20.
Before the due date on the loan, the lender is required
to accept a partial payment of $50 or more and apply the payment to the
outstanding balance on the loan. On or after the due date, the lender can
take legal steps to collect the debt.
Yes. The lender may charge you 36% per annum for
one year after the due date and 18% per annum thereafter.
Yes. If the lender deposits your check and it is
returned unpaid by the bank, the lender can charge you an additional $25 NSF
check fee and is entitled to be reimbursed the fee (usually $2 - $3) that the
lender's bank charges for processing the NSF check.
Yes. However, it is not a good idea to make one loan to pay off another and may cause additional financial hardship. If the first loan did not resolve your financial difficulties, a second loan will likely make things more difficult. The more payday loans you have outstanding, the harder it will be to pay them off completely.
WARNING: Payday loans are not intended to meet your
long-term financial needs. The long-term use of payday loans may cause
financial hardship.
(This document is intended to comply with the directives of HCR 137 from the 2009 Regular Legislative Session.)