Best Loans in California, Payday, Auto Title Laws 2019 - Elite Personal Finance
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Best Loans in California, Payday, Auto Title Laws 2019

EPF Last Update: July 19, 2019
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In the Golden State, non-bank lenders made $347.2 billion in loans in 2017. Nearly 50% ranged between $2,500 and $10,000 and carried an APR of 100% or more.

Focus on that $2,500 figure.

The California Finance Lenders Law allows companies to charge whatever interest rate they want on installment loans of at least $2,500. Because of this, many California borrowers receive very high APRs and end up falling into a vicious debt trap. And what about payday loans? They’re legal in California. But, because they’re not installment loans, state law allows a maximum APR of 460% and limits borrowing amounts to $300.

With such a wide range of lending regulations, finding a reliable loan in California with an affordable APR is more difficult than ever. But don’t worry! We conducted the research so you don’t have to! We’ll show you where to find the best loans in California – regardless of your credit score.

Now, if you have really bad credit, you’ll likely qualify for an APR of 20% or more. But, because personal loan providers in California cap their APRs at 35.99%, their options are reasonable. If you’re forced to settle for an alternative payday loan, APRs can reach triple-digits, but most lenders cap their APRs at 200%.

Best Bad Credit Loans In California

California state law requires lenders to cap installment loan interest rates at roughly 30% for all amounts below $2,500. For loans of $2,500 or more, lenders can charge any rate they prefer. For car title loans – which require you to put up your car as collateral – the law requires a minimum loan amount of $2,500. Any amount below $2,500 is prohibited. As well, interest rates are capped at 36%, as long as the loan doesn’t exceed $4,999.

Here are the best personal loans that we recommend for bad credit. Try them and they will help you avoid payday loan APR of 400%.

Lender:Min Credit Score:Loan Amount:APR:Licensed in California:
BadCreditLoans0$500 – $5,0005.99% – 35.99%Not a direct lender
CashUSA0$500 – $5,0005.99% – 35.99%Not a direct lender
OppLoans0$1,000 – $4,00099% – 199%Yes
LendUp0$100 – $1,00030% – 1252%Yes
LendingTree500$1,000 – $35,0003.99% – 35.99%Yes

If you have problem with getting a loan, please read our complete guide on bad credit loans.

Best Personal Loans for Good Credit In California

When you opt for a good credit loan, products are usually in compliance with California law. Nearly all of the lenders on our list are licensed through the California Department of Business Oversight (DBO).

Lender:Min Credit Score:Loan Amount:APR:Licensed in California:
Prosper640$2,000 – $40,0006.95% – 35.99%Yes
SoFi680$5,000 – $100,0005.99% – 16.24%Yes
Payoff640$5,000 – $35,0005.99% – 24.99%Yes

To find the best loan in California – regardless of your credit score – check out our list of recommended lenders.

We also recommend SuperMoney. They are one of the best loan comparison sites. Once you register, they will instantly show you all options instead of sending your personal information to thousand of lenders.

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Payday Loans in California

Maximum Loan Amount: $300

Minimum Loan Term: Not specified

Maximum Loan Term: 31 days

Maximum Fee: 15% of the loan or $45

Maximum APR: 460%

Rollovers: Prohibited

Loan Limit: You can only have one payday loan at a time

Like we mentioned above, payday loans are legal in California. Loans are capped at $300, but because payday loans are not installment loans, lenders are allowed to levy APRs upwards of 460%.

So what other state laws must payday lenders abide by?

Well, they need to monitor your credit history because borrowers are only allowed one payday loan at a time. As well, financing charges cannot exceed $45 or 15% of the face value of the loan. Regulators also prevent payday debt traps by banning rollovers. If you fall behind on your payment or can’t repay the loan, the lender can’t force you to refinance. Payday lenders are also not allowed to charge prepayment fees, but they can charge a $15 non-sufficient funds fee if your checking account balance is short.

Non-sufficient funds fees are major headache for borrowers. Not only will the payday lender charge you the fee, but your bank will also hit you with an overdraft fee. The Consumer Financial Protection Bureau (CFPB) found that 20,000 bank account holders who took out payday loans ended up paying an average of $97 in overdraft and non-sufficient funds fees. The amount is almost three times the $34 incurred by the average American.

Starting in July, 2019, California state law will also require ‘full-payment tests’. Here, lenders need to reasonably assess a borrower’s ability to pay before offering a payday loan. This includes assessing a borrower’s income and living expenses. The law will also require a ‘debit account cut-off’. Because payday lenders are extremely aggressive at trying to recoup their funds, the new law limits lenders to two debits of your checking account. After that, the lender needs your permission to proceed.

Remember, at their core, payday loans are extremely predatory. That’s why we don’t recommend them. Across all states, APRs average 400%, and states that do allow rollovers see borrowers to fall into terrible cycles of debt. Interest charges end up accumulating so quickly that a $1,000 payday loan ends up costing in excess of $3,000. Trust us, payday loans do more harm than good. And if you stick to the companies above, you finances will be better off.

 

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The Problem With Payday Loans

Because California prohibits payday loan rollovers, borrowers are less likely to fall into a debt cycle. And because it’s illegal to take out multiple payday loans at once, you decrease your risk even further.

Despite all of that that, we still don’t recommend payday loans. They’re extremely expensive and today’s lending market offers much better alternatives.

According to a recent study by the DBO:

  • Payday loans in California have an average APR of 372%
  • The average amount borrowed is $251
  • It takes an average of 17 days to repay the funds
  • The average borrower takes out 6.4 payday loans per year
  • Senior citizens are the primary users of payday loans
  • To avoid class action lawsuits, 28% of payday lenders put legal clauses in their contracts

If you come across an unlicensed payday lender or one who’s practices don’t comply with California state law, you can file a complaint through the DBO. Submitting the complaint online ensures faster processing, however, you can also download the form and mail it to them directly. A second option is to file a complaint through the CFPB. The entire process is done online and most complaints receive a response within 15 days.

What If I Don’t Qualify For A Loan?

If you’ve exhausted all of your resources and still can’t obtain a loan, today’s digital economy offers ways to supplement your income and get you through the rough patch. You can moonlight as an Uber driver, spend an afternoon taking paid surveys or find online work through one of several freelancing websites. For tips on the best free and easy ways to make money, see our detailed guide.

How To Spot A Crooked Payday Lender?

To determine whether or not a payday lender is legit, look out for these warnings signs:

  • If the lender doesn’t display its state license and list all fees at its location, the company is likely operating illegally.
  • If the lender offers rollovers, it’s operating illegally. California state law does not allow rollovers.
  • If the lenders asks you to sign a contract in a different language, it’s illegal. In California, lenders are required to write up contracts in the language the borrower speaks fluently.
  • If the lenders offers loans in excess of $300 or the APR exceeds 460%, it’s operating illegally.
  • If the lender offers you several payday loans at once, it’s operating illegally. California state law limits borrowers to one payday loan at a time.

For further information, you can contact the California Department of Business Oversight (DBO) – at 1-866-275-2677 – and make sure the lender is registered in the state. You can also visit the DBO.

Car Title Loans in California

Like payday loans, car title loans are extremely predatory. Average APRs come in at 300% and the product is actually illegal in many states. However, car title loans do have the green-light in California. Regulators require a minimum loan amount of $2,500 and interest rates cannot exceed 36% as long as the loan is less than $4,999. If you miss a payment though, the law allows lenders to seize your car as soon as the next day. The lender does not have to provide any prior notice or contact your beforehand either. Moreover, the lender does not have to inform authorities its about to repossess your car, it only needs to inform them afterwards that the seizure has taken place.

Because of this, we recommend extreme caution with car title loans. Be sure you can repay the proceeds in full and on time, because if you don’t, the consequences will be severe.

Alternative Payday Loans In CA

Alternative loans are a great option when you don’t qualify for a personal loan, but want to avoid the high APRs of a payday loan. Alternative loans have APRs that exceed 35.99% but are usually capped at 200%. For more information, see our detailed guide.

Because alternative loans are installment loans, interest rates figures need to comply with California state law. However, because APRs include fees and other charges, lenders are able to keep financing costs within the allowable limit.

Take Opploans for example.

The alternative lender is licensed in California and details examples of its financing costs. A $3,925 loan – repaid over 26 bi-weekly payments – incurs a finance charge of $4,737. The figure implies an APR of 162.49%.

Similarly, LendUp is another alternative lender that’s licensed in California.

The company offers single-payment loans and installment loans. For single-payment loans, you can borrow anywhere from $100 to $255, with repayment terms of 7 to 30 days. Because single-payment loans are not labelled as payday loans, APRs can range between 214.13% and 917.71%. For its installment loans, you can borrow anywhere from $100 to $100,000 with repayment terms of up to 6 months. The examples on its site show APRs ranging from 31.99% to 70.06%.

Credit Unions In California

Name:APR:Amount:
Los Angeles Federal Credit Union12% – 18%$5,000
Federal Employees West Federal Credit Union10,90% – 18%$8,000
Los Angeles Police Federal Credit Union9.95% – 17.55%$100,000

Los Angeles Federal Credit Union

Offering personal loans of up to $5,000 with APRs that range from 12% to 18%, Los Angeles Federal Credit Union is a great place to obtain a hometown loan. Repayment terms extend up to 60 months and loans are unsecured, so no collateral is required. The company requires a minimum credit score of 600 and there are no hidden fees. Moreover, the credit union has local branches in Cerritos, Culver City, El Monte, Gardena, Glendale, Downtown LA and Van Nuys.

Federal Employees West Federal Credit Union

While it doesn’t disclose its minimum credit score, you can borrow anywhere from $200 to $8,000 and APRs range from 10.90% to 18%. As well, repayment terms extend up to 48 months and there are no hidden fees or prepayment penalties. Moreover, the company also offers a great secured loan alternative. If you deposit funds in a savings account, you borrow up to 90% of the proceeds and your APR will only be 2% above your savings rate. The secured option also has no minimum credit score requirement. For more information, you can visit its local branch at 611 W. 6th Street, Suite 875, Los Angeles, CA 90017.

Los Angeles Police Federal Credit Union

Similar to Federal Employees West, the LA Police Federal Credit Union doesn’t disclose its minimum credit score. However, loan APRs range from 9.95% to 17.55% and you can borrow up to $100,000. The company has several branches throughout California, with locations in Santa Monica, Los Angeles, El Segundo, Vernon as well as many others.

Student Loans In California

If you’re heading off to university, the best approach is to apply for a Federal Student Loan through the U.S. Department of education. We recommend federal student loans because they offer debt forgiveness to borrowers who demonstrate significant financial need. For more information on the type of plans available and how they work, see our detailed guide.

For residents in California, however, you also have access to generous state-level programs that can decrease or even eliminate your tuition payments all together.

University of California (UC) Blue and Gold Opportunity Plan

Designed specifically for attendants of the University of California (UC), the Blue and Gold Opportunity plan allows eligible undergraduates to have their tuition covered by student aid. To qualify, your family must have an annual income of less than $80,000 and you must submit your application no later than March 2nd of each year.

The Blue and Gold Opportunity Plan is open to:

  • Residents of California
  • Undergraduate students in their first 4 years of attendance (first 2 years for transfer students)
  • Students enrolled in at least 6 classes (at least half-time)
  • Students who maintain compliance with UC’s academic standards
  • Students whose family has an annual income of less than $80,000

California Middle Class Scholarship (MCS)

The MCS will cover anywhere from 10% to 40% of your tuition if your family’s annual income is less than $177,000. The grants are available to attendants of the University of California (UC) and California State (CSU) campuses.

To qualify, you must:

  • Be a California resident
  • Attend UC or a CSU
  • Be a U.S. citizen, permanent resident or have AB 540* student status
  • Meet academic requirements
  • Not be in default of any other student loan

If approved, you can receive an MCS grant each year for the entire four years of your undergraduate degree.

California DREAM Act

Designed specifically for undocumented students, the California DREAM Act provides financial aid to attendants of any public college in California.

You can apply if:

  • You’re an undocumented student
  • You have a valid or expired DACA
  • You’re a U Visa holder
  • You currently have Temporary Protected Status (TPS)

Federal Housing Administration (FHA) Loans In California

FHA loans are tailored to middle and low-income borrowers. They require a small down payment – roughly 3.5% – and borrowers with low credit scores are more likely to be approved. However, you usually need a credit score of 580 or more to qualify. If your credit score ranges from 500 to 579, you can still qualify, but your down payment will jump to at least 10%.

In California, state law regulates FHA loans by county and home size – meaning 1-bedroom homes qualify for a lower amounts, while 4-bedroom homes qualify for higher amounts.

Here are the figures by county:

County:Lowest FHA Loan Amount:Highest FHA Loan Amount:
Butte County$314,827$605,525
Colusa County$314,827$605,525
Del Norte County$314,827$605,525
Fresno County$314,827$605,525
Glenn County$314,827$605,525
Imperial County$314,827$605,525
Kern County$314,827$605,525
Kings County$314,827$605,525
Lake County$314,827$605,525
Lassen County$314,827$605,525
Madera County$314,827$605,525
Merced County$314,827$605,525
Medoc County$314,827$605,525
Shasta County$314,827$605,525
Sierra County$314,827$605,525
Siskiyou County$314,827$605,525
Tehama County$314,827$605,525
Trinity County$314,827$605,525
Tulare County$314,827$605,525
Mariposa County$322,000$619,250
Sutter County$324,300$623,650
Yuba County$324,300$623,650
Tuolumne County$331,200$636,900
Humboldt County$333,500$641,350
Plumas County$336,950$648,000
Amador County$350,750$674,500
Stanislaus County$350,750$674,500
Inyo County$369,150$709,900
Calaveras County$373,750$718,750
Mendocino County$409,400$787,300
San Joaquin County$425,500$818,250
Riverside County$431,250$829,350
San Bernardino County$431,250$829,350
Alpine County$463,450$891,250
Nevada County$486,450$935,500
Solano County$494,500$950,950
Mono County$529,000$1,017,300
El Dorado County$552,000$1,061,550
Placer County$552,000$1,061,550
Sacramento County$552,000$1,061,550
Yolo County$552,000$1,061,550
Monterey County$652,050$1,253,950
Santa Barbara County$653,200$1,256,150
San Luis Obispo County$667,000$1,282,700
San Diego County$690,000$1,326,950
Sonoma County$704,950$1,355,700
Ventura County$713,000$1,371,150
Alameda County$726,525$1,397,400
Contra Costa County$726,525$1,397,400
Los Angeles County$726,525$1,397,400
Marin County$726,525$1,397,400
Napa County$726,525$1,397,400
Orange County$726,525$1,397,400
San Benito County$726,525$1,397,400
San Francisco County$726,525$1,397,400
San Mateo County$726,525$1,397,400
Santa Clara County$726,525$1,397,400
Santa Cruz County$726,525$1,397,400

As you can see, the smallest loan amount is $314,827, which is the legal limit in 19 counties. Contrast that with a largest loan amount of $1,397,400 – which is the legal limit in 11 counties.

Business Loans in California

If you need a business loan, there are great online lenders that offer extremely competitive APRs:

Lender:Min Credit Score:Loan Amount:APR:Complies Licensed in California:
LendingClub630Up to $500,0009.77% – 35.98%Yes
LendingTree500Varies5.99% – 35.99%Yes
Kabbage0Up to $250,00024% – 99%Not a direct lender

As well, there are unique lending programs only available in the state of California. If you don’t qualify for the options above or prefer to deal with a local lender, the programs below offer great alternatives.

California Small Business Loan Guarantee Program

Organized by the Small Business Finance Center (SBFC) of California, the program partners with seven financial institutions. The SBFC guarantees 80% to 95% of each loan, making its seven partner lenders more willing to provide financing.

To qualify:

  • You need to run a small business that has 750 employees or less
  • You need to meet specific lender requirements
  • You must be a for-profit business or eligible non-profit

If approved, you can borrow up to $20 million and repayment terms range from seven years and up.

Valley Economic Development Center (VEDC) Small Business Loans

With VEDC loans, you have three options to choose from:

  • VEDC Standard Loans allow you to borrow anywhere from $50,000 to $500,000 and have interest rates as low as 8%. Repayment terms range from six to 60 months and loan origination fees usually range from 2% to 3%.
  • VEDC Microloans range from $2,500 to $50,000 and have the same repayment terms as above. However, interest rates are as low as 7.5% and loan origination fees range from 3% to 5%
  • VEDC Microenterprise Loans range from $500 to $2,500 and you can repay the funds in as little as six months or upwards of two years. Interest rates are as low as 8.5% and loan origination fees range from $25 to $50.

Accion Rapid Loan

While Accion offers loans across the country, its Accion Rapid Loan is only available in California. However, your business needs to reside in Imperial, Riverside, San Diego or San Bernardino to qualify. You can borrow anywhere from $300 to $8,000 and repay the funds in three years or less. Interest rates range from 14% to 18%, but a 1% discount is offered to military personnel. As well, you need a minimum credit score of 550 to qualify.

How To Avoid A Cycle Of Debt

When bills are piling up, taking out a loan can seem like your only option. However, if you’re not careful, the process can quickly get out of hand. You end up trying to service several loans that continue to compound with interest.

If you’re struggling and not sure where to turn, consider contacting a credit counselor. They can advise you on how to reduce your debt load as well as work with creditors to find an amicable solution. Many are available through non-profit organizations and you can find help through the Financial Counseling Association of America and the National Foundation for Credit Counseling.

Through the CFPB’s website, you can also find information on how to develop a debt management plan as well as avoid upfront fees when working with debt settlement companies.

Conclusion

With so many regulations in place to protect consumers, The Golden State is a great jurisdiction to obtain an affordable loan. And while its payday loan regulations have exploitable loopholes, the state of California is still miles ahead of others when it comes to ensuring fair and honest borrowing. Despite that, California’s car title loan statutes need plenty of work. If you miss one payment, lenders have the legal right to seize your car as early as the next day. Moreover, the lender does not have to contact you or give prior notice. With so many other great laws in place, it’s strange why this one is still on the books. For student loans though, California sets the standard. Government grants limit you to public colleges and universities, but California’s debt forgiveness and subsidy programs for low-income families make it one of the most affordable states in the country to attend university.

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