New Jersey Payday Loan Law and Legislation
In the state of New Jersey, payday lending is prohibited.
New Jersey is one of the states that prohibit payday lending at excessive interest rates. All payday lenders wishing to operate in the state should adhere to 30% APR usury cap (as of the criminal usury statute), also, none of the check casher businesses are allowed to advance money on postdated checks. Such terms rendered payday lending business unprofitable in the state.
New Jersey Payday Lending Statutes
Regulation documents with regards to payday loan laws are Consumer loan act, N.J. Stat. Ann. tit. 17, 1 et seq., N.J. Stat. Ann. 2C: 21-19., and N.J. Stat. Ann. 17:15A-47.
Short-term or long-term loans in NJ can only be offered by banks and other licensed lenders (here, 30% usury cap applies).
New Jersey prohibits check cashers, even the ones with a proper license, to issue cash advances on a post-dated check:
- A person acting on behalf of neither licensed lenders nor any licensee themselves is permitted to cash or advance monies on postdated checks, Under 17:15A-47. Prohibited transactions.
Also, the law in New Jersey prohibits a lender to cash a paycheck to anyone who does not have a banking account. So, a person can only deal with the bank where they have got an account.
The laws are equally applicable to all lenders, in- and out-of-state, and the ones that run their business online as well. The problem with online payday lenders is that they are hard to locate and in many cases are next to impossible to be brought to order, thus, many of them operate regardless of the existing state laws.
Rates, Fees and Other Charges in New Jersey
The state has got pretty strict usury laws. It forbids charging borrowers the interest rate in excess of 30% per annum. This is a really small rate for businesses that usually charge 3-digit numbers of APR. However, this is the state law that aims at preventing usury and every lender charging in excess is considered violating the law. This is also the reason why legal lenders do not work in the state.
All other lenders offering any type of consumer loan in New Jersey should comply with the Consumer Loan Act (N.J. Stat. Ann. tit. 17, 1 et seq.)
More information about payday loans in New Jersey and their legal state can be found on the official website of the Department of Banking and Insurance of New Jersey.
The government urges state consumers who have encountered problems to contact the Department online at www.dobi.nj.gov.
Regulator: Complaints & Information
New Jersey Department of Banking and Insurance
Mailing Address: P.O. Box 325, Trenton, NJ 08625
Address: 20 W State St, Trenton, NJ 08625
Phone: 609-292-7272 or 800-446-7467 (hotline)
File a Complaint: https://www.state.nj.us/dobi/consumer.htm
Number of New Jersey Consumers Complaints by Topics
According to CFPB Consumer Complaint Database
- Charges from account ( 191 )
- Fraud and threat ( 103 )
- Not exiting debt ( 69 )
- Credit rating ( 28 )
- Loan to return ( 24 )
- Not requested loan ( 21 )
- Lender is not available ( 21 )
- Loan not received ( 14 )
The History of Payday Loans in New Jersey
- 1993 – The Check Cashers Regulatory Act prohibited check cashers to cash or advance money on a postdated check.
- 2006 – The Military Lending Act effectively capped payday loans offered to the military at 36% APR. This federal law has no exceptions, thus, no lender in New Jersey is now allowed to offer loans to the military in excess of 36% APR.
- 2013 – Statute N.J.S.A. 2C:21-19(a) prohibits payday lending through criminal usury and limits loans to 25% and 30% APR, respectively.
- June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (the federal rule is expected in November 2020).
- The situation in New Jersey stays the same. However, it is hard to predict how it will change should the Rule not come into effect as it is expected.
[Updated As of February 2020]