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Simple English definitions for legal terms
small-loan act
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A quick definition of small-loan act:
Small-Loan Act: A law in a state that sets the highest amount of interest and other conditions for small, short-term loans given by banks and finance companies.
This law is designed to protect borrowers from being charged excessive interest rates and fees on small loans. It ensures that lenders cannot take advantage of people who need quick cash for emergencies or unexpected expenses. The Small-Loan Act helps to promote fair lending practices and responsible borrowing.
A more thorough explanation:
A small-loan act is a law created by a state that sets the highest legal interest rate and other terms for small, short-term loans provided by banks and finance companies.
For example, in California, the Small Loan Law limits the interest rate on loans of $2,500 or less to 36% per year. This means that lenders cannot charge more than 36% interest on loans of $2,500 or less.
The purpose of the small-loan act is to protect consumers from predatory lending practices and to ensure that they are not charged excessive interest rates on small loans. These laws help to regulate the lending industry and provide a level of protection for borrowers who may not have access to traditional banking services.