Are you based in Maryland and looking for short-term financing? If so, you should know that payday loans in the state were outlawed way back in 2002. As such, you will need to consider an alternative funding source to meet your financing needs. Other loan options in Maryland includes a personal loan or an auto title loan for those of you that own a vehicle. The good news is that Maryland has also capped the amount of interest that lenders in the state can charge.
This stands at a maximum APR of 33% – or 2.75% per month. With that said, a number of non-licensed lenders still operate in Maryland in the form of Tribal loan companies. Such firms are not required to comply with state lending laws, meaning that they still offer payday loans to Maryland residents.
If you’re keen to find out what your financing options are in Maryland, be sure to read this guide on Maryland Payday Loan Lenders in 2020. Within it, we cover the ins and outs of the current laws governing loans in Maryland, as well as a breakdown of what funding options you have at your disposal.
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Why are Payday Loans Banned in Maryland?
While a number of US states decided to ban payday loans in the midst of the financial crisis in 2008 – legislators in Maryland were ahead of the curve. By this, we mean that payday loans in the state were prohibited way back in 2002. Before then, payday loan companies in Maryland were plentiful – subsequently giving residents access to fast and easy cash. However, this came at a cost – with payday loan firms known to charge well in excess of 600% APR.
As such, legislators stepped in to prevent an ever-growing lending space that was causing financial distress to many Maryland residents. The current state of play is as follows – loans in Maryland are capped to a maximum lending charge of 33% per year – or 2.75% per month. However, if you find yourself taking out a loan for $2,000 or more, the interest cap is further tightened. This stands at 24% per year or 2% per month for anything over $2,000.
These lending caps subsequently pave the way for a fair and ethical Maryland lending sector. Breaking down state lending laws further, there is no limit to the amount that loan companies can lend out. There is no minimum or maximum loan term, so this at the very least offers you an element of flexibility.
However, it is crucial to note that the aforementioned regulations do not apply to Tribal loan companies – as they operate under their own codes of practice. As such, a number of Tribal lending firms operating in Maryland still offer payday loans. As state lending laws do not apply, this allows such lenders to charge as much interest as they wish – so tread with extreme caution if you find yourself borrowing funds a Tribal company.
Best Maryland Alternatives to Payday Loans in 2020
Alternatives to Payday Loans in Maryland
So now that you know that payday loans in Maryland have been banned since 2002 – and that state lending laws cap interest to 33% per year – we are now going to explore what your alternative funding options are. Take note, the specific loan type that you opt for will depend on a range of factors – especially your creditworthiness. Moreover, some loan types – such as personal loans, are only suitable for larger loan amounts.
Below we have outlined the main loan types that you have at your disposal in Maryland.
Tribal Loans in Maryland
As we have already discussed, Tribal loan companies in Maryland do not operate under state lending laws. Instead, Tribal companies abide by their own regulations. As such, it’s still possible to obtain financing that mirrors that of a payday loan through a Tribal lender. This option might be suitable for one of two key reasons. First and foremost, Maryland Tribal loan companies typically have very low eligibility requirements.
Not only will they consider applicants with bad credit, but some firms will not run a credit check at all. As such, a no credit check loan through a Tribal lender might allow you to meet your emergency financing needs even if your credit is beyond damaged. Secondly, Maryland Tribal loans are suitable if you only need to borrow a few hundred dollars to see you through the month.
In most cases, you will see the loan funds deposited into your checking account on the same day that your application is approved. However, it is important to remember that the 33% APR cap does not apply to Tribal loans. This means that you could end up paying a triple, or even a four-figure rate of interest on your loan. This is why you should only use a Maryland Tribal lender as a last resort.
Pros and Cons of Tribal Loans in Maryland
- Very similar to conventional payday loans
- The application process can usually be completed online
- Suitable for those with poor or bad credit
- Funding often executed on a same-day basis
- Some lenders do not run credit checks
- Flexibility on repayment terms
- All loans are unsecured
- Tribal firms do not need to abide by state lending laws
- Interest rates are often sky-high
- Targets those with damaged credit and low incomes
- Often hide behind shell companies
Personal Loans in Maryland
If you don’t like the sound of using an unregulated Tribal lender for your financing needs, it might be worth considering a Maryland personal loan company. In doing so, you will benefit from the protections put in place by state lending laws. This means that you will never pay more than 33% in interest. If your personal loan is above $2,000, the interest will be reduced further. This stands at 24% for everything over $2,000 – or 2% per month.
For example, let’s say that you borrowed $3,000 from a lender. The worst-case scenario would be that you pay 33% on the first $2,000, and then 24% on the remaining $1,000. In terms of the fundamentals, personal loans are usually suitable for larger loan amounts. You typically need to borrow the funds for a term of at least 1 year – sometimes more. On the flip side, you will benefit from lower monthly repayments, which is ideal if you don’t have much in the form of disposal income.
Pros and Cons of Personal Loans in Maryland
- Complete the entire application online
- Interest rates are capped at 33% APR
- Maximum of 24% APR after the first $2,000 borrowed
- Funds usually transferred within 1-2 working days
- Loans are unsecured
- Repay the funds over a number of years
- Not suitable for short-term financing – minimum term of 1 year+
- You’ll likely pay an origination fee
- The best rates are reserved for good or excellent credit scores
Auto Title Loans in Maryland
If you don’t want to use a Tribal lender – and you don’t have a need to borrow a large amount of cash through a personal loan, then you might need to consider an auto title loan. These are loans that are backed by your car or motorbike, so you’ll be putting the vehicle up as collateral. With that said, you’ll be able to borrow a percentage of what your vehicle is worth on the market.
You simply need to enter your vehicle registration number and the lender will let you know how much you can borrow. Although you always stand the risk of losing your car or motorbike in the event that you fall behind on your repayments, auto title loans do come with a number of benefits.
For example, you’ll be able to borrow a few hundred dollars and still benefit from the state lending cap of 33% per year. Moreover, auto title loans are ideal if you’ve previously been turned away from lenders because of bad credit. Instead, auto title loan firms will consider all credit profiles because they have your vehicle as security.
Pros and Cons of Auto Title Loans in Maryland
- Perfect for credit profiles of all shapes and sizes
- You will still benefit from the 33% APR lending limit
- Borrow an amount proportionate to the value of your car or motorbike
- No need for the lender to keep the car
- Funds transferred within 1-2 working days
- Reduce your interest payments through a secured loan
- Get an instant quote by entering your vehicle registration number
- You can have your vehicle repossessed if you default on the loan
- The car valuation might be less than you had hoped for
Am I Eligible for a Loan in Maryland?
The specifics surrounding eligibility will depend on a number of variables – which ultimately, will be determined by the lender in question. With that said, if you’re currently in possession of bad credit – and you’ve got a history of falling behind on loan repayments, then you might be forced to use a Tribal loan company. At the other end of the spectrum, if you’ve got good credit and you always meet your debt obligations – you’ll be eligible for all loan types.
We’ve listed the main requirements that lenders in Maryland typically ask for to be eligible for financing.
Regular Source of Income: All lenders – even Tribal loan companies, require you to have a regular income
Minimum FICO Score: Some lenders in Maryland will ask you to meet a minimum FICO score to be eligible.
Maryland Resident: You need to be a state resident to get a loan in Maryland
18 Years or Older: You also need to be aged at least 18 years old to get a loan
How can I get a Loan in Maryland Today?
Are you based in Maryland and looking for fast funding today? If so, follow the quickfire guidelines outlined below.
Step 1: Decide Loan Type and Choose a Maryland Lender
You will first need to decide what type of loan you want to apply for. Options include a personal loan, auto title loan, or Tribal loan. Next, you’ll need to choose a Maryland lender that allows you to complete the application process online. You need to ensure that your chosen lender meets your financing requirements – such as the amount you wish to borrow and for how long.
It is also important that you explore the types of interest rates charged by the lender. Although you might be protected by the 33% APR limit, you’ll want to reduce your interest charges as much as possible. The easiest way to ascertain the types of fees charged by lenders in Maryland is to check the platform’s representative rate.
Step 2: Apply Online
Once you have determined your preferred loan type and you’ve chosen a lender – you will then need to start the online application process. First, you’ll need to state how much you want to borrow and for how long. You might also be required to enter your next salary date if opting for a Tribal lender.
At the next stage of the application process, you will be asked to enter some personal information. This will include:
- First and Last Name
- Home Address
- Date of Birth
- State ID Number
- Contact Details
- Income After-Tax
- Name and Address of Employer
- How Long You Have Lived at Current Address
Step 3: Review Loan Terms
Once you’ve filled out the application form, your chosen Maryland lender will then check your information with third-party sources. This shouldn’t take more than a minute, so you should get a decision on your application straight away. If you are approved for a loan, the lender will list your personal interest rates. You are under no obligation to proceed with the terms offered, so walk away if you think that the interest is too high.
Step 4: Bank Details and Digital Loan Agreement
If you are happy with the loan terms that have been offered to you, the lender will then ask you to enter your checking account details. This is where the loan funds will be deposited. It’s also likely that the lender will ask you to set up an electronic debit agreement, which will allow it to take your repayments from your checking account automatically.
To complete the application process, sign the digital loan agreement that is sent to you. Depending on the loan type you have opted for, you should receive the funds within 0-2 working days.
In summary, Maryland has reasonably strict laws governing loans in the state. Not only were payday loans outlawed way back in 2002, but lenders are restricted in the amount of interest that they can charge. Notably, this stands at 33% per year or 2.75% per month. Loans over $2,000 are capped at 24% annually, which ensures that you as a Maryland resident are accustomed to ethical lending practices.
However, a number of lenders operating in Maryland are not required to comply with the above laws. On the contrary, Tribal loan companies operate under their own codes of practice. This means that they can charge as much interest as they like – so do tread with caution if opting for a Tribal loan. Ultimately, whichever loan type you do decide to take out, just make sure that you have the required means to meet your repayments on time.
Can I apply for a payday loan online if I live in Maryland?
No, payday loans in Maryland have been banned since 2002 as a result of unethical lending practices. However, a number of Tribal lenders still offer payday loans in the state as they are not bound by Maryland regulations.
Is it safe to use a Tribal payday loan company in Maryland?
As long as you have a firm grasp of the interest being charged - and you always meet your repayments on time, you should have no issues when using a Tribal lender. However, if you fall behind on your repayments or worse - you default on the loan, Tribal lenders are known to charge extortionate fees.
How much interest will I pay on a loan in Maryland?
’Lenders cannot charge more than 33% per year in interest, or 2.75% per month. Loans above $2,000 are further capped, with interest limited to 24% per year, or 2% per month. The only exception to these rules are Tribal loans.
How much can I borrow from a Maryland lender?
There are no caps to the amount that you can borrow from a lender in Maryland. Instead, your loan limits will be determined by the lender itself.