What should I know about payday loans?

Contents

• What are payday loans?
• What are my rights and responsibilities with payday loans?
• What are a lender's rights and responsibilities with payday loans?

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What are payday loans?

A typical payday loan is when a lender accepts a post-dated check in exchange for cash. The lender will hold the check for a short period of time and charge a high fee or interest. For the most part, payday loans are illegal in Georgia. However, two types of lenders can legally make payday loans: 

• licensed industrial loan lenders, or

• out-of-state FDIC insured banks, as long as an agent in Georgia does not receive most of the profits. 

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What are my rights and responsibilities with payday loans?

In Georgia, a licensed lender cannot charge more than 10% interest on a loan of $3,000 or less. If you borrow money from an out-of-state bank, that state’s interest limit would apply. 

 

If you are charged an illegal interest rate, you have the right to pursue criminal action.

 

If you accept a legal payday loan, you are responsible for repaying the loan amount, plus the agreed-upon fees and interest rate. 

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What are a lender’s rights and responsibilities with payday loans?

All lenders must tell you the finance charge (a dollar amount) and the APR on the loan, which is the cost of credit on a yearly basis. 

Lenders who make small loans at illegal interest rates in Georgia can face: 

• misdemeanor charges,

• fines of up to $5,000 per violation, and

• a possible jail sentence of one year.

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Contents

• What can I do if I'm a victim of an illegal payday loan?

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What can I do if I’m a victim of an illegal payday loan?

If you are a victim of an illegal payday loan, you can make a criminal complaint with your local district attorney. You can also make a report to the Office of the Commissioner of Insurance.

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