Are Payday Loans Illegal in New York?
Payday loans are illegal in New York state. A payday loan is a relatively small (usually under $500), high interest, short-term loan. A borrower gives a lender a postdated personal check or authorization for automatic withdrawal from a bank account. In return, the borrower gets cash, minus the lender's fees. The lender holds the check or electronic debit authorization for a week or two (usually until the next payday). At that time, the borrower has the option of (1) paying back the loan and fee in exchange for the original check, (2) letting the lender deposit the check, or (3) renewing or ‘rolling over’ the loan.