Payday Loan in Washington
Legal Status: Legal (Lender must have a small loan endorsement to their check casher license in order to make payday loans)
Citation:
Wash. Rev. Code Ann. § 31.45.010 et seq.
Loan Terms:
Maximum Loan Amount: $700
Loan Term: Max: 45 days
Maximum Finance Rate and Fees: 15%: first $500; 10%: remaining portion of the loan in excess of $500 up to the $700 maximum
Finance Charge for 14-day $100 loan: $15
APR for 14-day $100 loan: 390%
Debt Limits:
Maximum Number of Outstanding Loans at One Time: A company cannot hold a check or checks in an aggregate face amount of more than $700 plus allowable fees from any one borrower at any one time.
Rollovers Permitted: None (cannot repay loan with proceeds of another)
Cooling-off Period:
Repayment Plan: A company and a borrower may voluntarily enter a payment plan at any time. A borrower, however, has a right to convert a small loan to a statutory payment plan after four successive loans and prior to default on the last loan.
Collection Limits:
Collection Fees: $25 NSF fee (one time per instrument); collection costs (excluding attorney’s fees, interest and damages)
Criminal Action: Prohibited
Where to Complain, Get Information:
Regulator: Washington Department of Financial Institutions
Address: Division of Consumer Services, PO Box 41200 Olympia WA 98504
Phone: (360) 902-8700
Fax: (360) 725-7827
Applicability: To check cashers who make small loans on the security of a post-dated check. Otherwise, the consumer loan act applies. Wash. Rev. Code § 31.04.105 et seq. (25% per year plus a 4% loan origination fee for the first twenty thousand dollars of the principal amount of the loan advanced to or for the direct benefit of the borrower, which may be included in the principal balance of the loan).
Exemptions: Any bank, trust company, savings bank, savings and loan association, or credit union and others who cash checks as a convenience and as a minor part of its customary business and not for profit.
Licensing requirements: Department of Financial Institutions enforces. Must pay a fee set by regulation; post a surety bond running to the state and bond shall be liable for damages suffered by the borrower as a result of a licensee’s violation. Check cashers must specially apply for a small loan endorsement to make these loans. Must pay annual assessment fee.
Permitted charges: May charge interest and fees that in the aggregate do not exceed 15% of $0-$500 and 10% of $501-$700. The director may adopt rules that exempt certain fees from this cap.
Required disclosures: Must conspicuously post license in business. Must also conspicuously post a schedule of fees and charges for fees and charges. Disclosures must conform with Truth in Lending Act requirements.
Prohibited Acts: A person can not cash or advance any moneys on a postdated check in excess of the amount of services purchased, without first obtaining a small loan endorsement to a check casher. A licensee can not hold a check for later deposit.
Loan terms: A licensee may advance $700 on the security of a postdated check, provided that the time period between the date the loan is granted and the date of the postdated check does not exceed 45 days. Borrower may convert small loan to a payment plan after 4 successive loans and prior to default upon the last one. Plan must be in writing.
Enforcement: Director may serve charges upon a licensee if the licensee is engaging in unsound practice in a civil action. Any violation of the act is an unfair and deceptive act or practice and remedies available under that act apply.
