The Evergreen State
Named after President George Washington, Washington state is known as the Evergreen State. It is located in the far North West of the US and is the 13th most populous region with over 7 million residents. Washington state has been described as the best place for wealthy people to live. It has a tax system that helps the rich and leaves the poor with low wages on which they must scrape by.
Whilst there is no state personal income tax, federal income tax rates help the top earners who only pay 2.7%. Lower earners pay a significantly higher percentage and also pay some of the highest sales taxes in the US.
The basic sales tax starts at 6.5% but in some cities it is as much as 10.4%. Even though most foodstuffs are exempt, the excise taxes apply to gas, cigarettes and alcohol. Over 60% of the population resides in the Seattle Metropolitan area where there are some major well know employers including Boeing, Microsoft and Amazon.
Some historical facts about Washington State
Washington was settled by Europeans in the 1800s and eventually the British and the US agreed on joint occupancy of the land west of the coastal divide. More settlers eventually arrived traveling along the Oregon Trail and by 1853 a new territory was declared and approved by the US government.
Washington became the 42nd state in 1889. Its wealth was created by agriculture and lumber as well as vast plains of wheat and corn. The ports situated along the Puget Sound were especially busy shipping lumber products and other industries such as fishing and salmon canning began to thrive and create the wealth that Washington state still enjoys. Washington is now the state which has the largest North Western population with a large proportion of young residents.
Economy of Washington
Washington state is rich. In 2014 it was placed 14th in the list of richest states in the US and the residents came 10th on the list of highest earners. Four of the largest employers were in Fortune Magazines top twenty most admired companies list.
Nevertheless, a significant number of people who live there are on low salaries. In 2015 teachers went on strike for higher pay as their salaries were very divergent throughout the state with some earning higher wages than others. The rate of unemployment in the state is 4.5% and this is below the national average but still high enough to put some people in a position where they need to use payday loans.
Washington is a leading agriculture state. Amongst the produce is a wide variety of fruits, hops and potatoes but its wealth also relies heavily on manufacturing industries. The state has over 1,000 dams that supply water for irrigation and power.
As in other states the number of lower income residents has increased in Washington state. This has resulted in a large number of people turning to payday loans when an unexpected crisis arises. Washington state has a specific set of regulations for payday loans and lenders. These are shown below.
Payday lending in Washington State
In Washington state, payday loans are legal under 31.45.010 et.seg. but they are very expensive. There is access to state sponsored solutions to help people who are struggling including some emergency food banks. However, if you are considering taking out a payday loan you will need to read the regulations that govern payday loans.
Main terms of payday loans
The maximum amount that can be borrowed using a payday loan is $700 or 30% of the applicant’s gross monthly salary whichever is the lower amount. Loans have a minimum term that runs to the next payday and a maximum term of 45 days.
The maximum amount that can be borrowed in Washington using a payday loan is $700 or 30% of the applicant’s gross monthly salary.
However, if the next payday is within 7 days of the loan being taken out, it can run on to the next paycheck. The finance charges are dependent upon the amount borrowed. For the first $500 loan the rate is 15% then 10% is charged for the rest of the loan from $501 up to $700. This makes the total finance fee $15 for a 14 day $100 loan. This works out at 390% APR.
Limits of debt
Borrowers may only have one outstanding loan at a time. Lenders may not hold checks for more than $700 plus the fees for any one individual. There are no rollover or renewal loans allowed. A customer who cannot repay the loan can ask for an installment plan to pay off the debt as long as the request is placed before the end of the loan term. The installment plan can run for 90 days for a debt of $400 or less and for 180 days for larger amounts.
Limits of collection fees
Lenders can charge a one off $25 non sufficient funds fee and may also ask for reasonable collection costs but these do not include attorney fees, damages or interest.
Payday loans in Washington State
From the largest number of lenders in 2006, the number of payday lenders has decreased significantly. Loans taken out in 2010 amounted to 1,093,776. By 2010, the amount of loans taken out had reduced to 909,570 and there was a further reduction in 2014 to 819,755.
Regulations implemented in 2010 which limited borrowers to a maximum of 8 loans per year have led many lenders to abandon the state and helped to reduce the amount of people who were living in a continuous cycle of debt.
In that same year a central database was introduced that has helped to enforce the new restrictions. 2013 figures for payday loans show that $326,673,119 was borrowed which is a staggering amount. Plus, borrowers paid out $46,666,858 in fees and charges.
Finding a lender
You can find a payday lender in Washington State by consulting Yellow Pages which lists 291 companies. The top five lenders charge interest rates up to 651% APR and some of them also operate through an online platform. Online lenders are allowed but must adhere to the same regulations as those which operate through lending stores.
Who uses payday loans?
Analysis from 2015 to 2016 showed that 4.9% of adults used a payday loan in Washington State. The average sum borrowed was $361 and this is lower than many other states. Borrowers were split exactly 50/50 between men and women and the group taking out the most loans was in the 25 to 29 age bracket.
30% of borrowers earned less than $15,000 per annum and as annual income increased the amount of loans decreased. People who rented their home took out more loans than house owners with a split of 57% to 43%. And, the split between marrieds, divorcees and singles was fairly even at 29%, 27% and 27%.
Legislation for payday loans in Washington State
The regulator for payday loans in Washington State is the Department of Financial Institutions. Under the rules for check cashers and sellers, lenders are all required to be fully licensed.
The 2010 legislation implemented under the document Payday Lending – Borrowers Rights and Responsibilities also outlined changes to the law. The main points stated that a payday loan should not be used as a means of meeting long term financial needs and that the laws prohibit a lender from allowing more than one loan at a time.
Borrowers must not try to take out another loan if they are currently paying off a loon under an installment plan. And, if a borrower has taken out 8 loans within the previous twelve months, no more payday loans are allowed
All licensed lenders can be found on a register at the DFI website so potential borrowers can consult this register to confirm that their chosen lender is working within all the regulations. More information can be found and any complaints may be lodged with the DFI at the following address:
Department of Financial Institutions
150 Israel Road SW
Online lenders in Washington State
Online lenders are becoming a popular choice for people who need a payday loan. The requirements to obtain a loan are the same as those requested by store lenders. Applicants must be over the age of 18 and be an American citizen or a permanent resident of the US. They must also supply a proof of identity, proof of regular income, social security number, email address and bank account details.
Lenders will check the central database to make sure that there are no loans outstanding before granting a payday loan. The process through an online lender is very simple. The funds are directly deposited into the bank account and when repayment becomes due the funds plus fees are withdrawn by the lender.
Help available in Washington State
In Washington there are some agencies that can help you if you are not coping with everyday expenses. These include several food banks. The Emergency Food Network, the Tri-Cities Food Bank and Volunteer Food and Resource Center can provide access to food supplies and advise you where to go for help with unexpected high energy bills.
Summary of payday regulations for Washington State
The main rules for taking out a payday loan in Washington State require that no more than $700 or 30% of the applicant’s gross monthly salary may be loaned. Interest charges vary depending upon the amount loaned and are detailed above. Only one loan at a time may be taken out and if the borrower has an outstanding installment plan no further loans are allowed until this has been cleared. Collection fees are limited to a single $25 non sufficient funds charge and reasonable collection costs that exclude attorney fees, interest and damages.