Status: Legal, applies to check cashers only (Utah Code Ann. 7-23-101 et seq.)
Payday loans (also known as deferred deposit loans) are legal in Utah. This is one of the few states where cash advance loans are extremely popular. The loan term usually extends for 10 weeks, which means 70 days. Borrowers can take as many payday loans as they want. There is no cap on the maximum amount one can borrow.
The payday loan business has thrived and grown in the last 20 years. The lenient laws have helped lenders to reap huge profits by charging triple interest rates on cash advance loans.
As per the Utah payday loan laws, unauthorized lenders can’t give fast cash to borrowers. They can’t legally collect principal or interest on the cash advance loans. Mobile payday loan operations are also banned here.
There is no interest cap on payday loans in Utah. Texas charges the highest interest rate on payday loans. Next comes, Utah along with Nevada and Idaho. The interest rate can go up to 658% for a loan amount of $300.
As far as fees and finance charges are concerned, there is no limit on those areas also.
Borrowers are almost paying double due to the triple-digit interest rates. There are many people who borrow short-term loans during the festive season to cover extra expenses. They are compelled to pay almost double the original amount. Those who are unable to pay the amount are being sued by the lenders. Some of them even receive bench warrants for not showing up at the court..
No. The Utah payday loan laws prohibit any sort of criminal step against borrowers. However, lenders can file a lawsuit against borrowers and obtain judgments against them in the event of loan default. This option is open for the lenders.
In the last few years, many borrowers were arrested and thrown into jail. Most of them were loan defaulters. However, they were not arrested for not paying off payday loan debts in Utah. They were actually arrested for not attending the court hearings.
The payday loan laws in Utah allow lenders to charge up to $20 from the borrowers for each bounced check.
The Utah Department of Financial Institutions regulates payday loan business and practices in the state.
One of the reasons why payday loans are so popular in Utah is because lenders have enough freedom to do business here. Lack of stringent regulations and interest rate cap provides a huge scope for earning to payday loan companies in Utah. They have a field day here.
There are around 417 payday loan lenders in Utah. And why wouldn’t that be? Utah abolished the interest rate cap back in 1980. Moreover, the state government has not imposed any strict laws since then. Hence, there are more payday loan stores in Utah than food and beverage companies.
Payday loan companies are quite happy with the laws. They can do whatever they want. There is no restriction on the loan amount or the interest rate. They can sue borrowers and even use laws to issue bench warrants against cash-strapped borrowers. And, if anybody objects, they defend themselves against the allegations easily. According to them, they are working as per the Utah payday loan rule and regulations.