What is a Payday Loan Bond?
Payday loan bonds are used to protect consumers (or in this case, borrowers) from unlawful behavior committed by payday loan brokers and other small lending companies. Pending on the jurisdiction, payday loan bonds might also be called “small loan license surety bonds” or “deferred presentment provider surety bonds.”
Payday Loan Defined
A payday loan is referred to a small, short-term loan used as a means to manage a borrower’s breaks in cash flow between each payday. The loans are generally issued without credit checks and are not against pre-determined lines of credit.
State Specific Costs
The cost and requirements of payday loan bonds vary by a considerable amount, as the rules and regulations surrounding each license are established on the state level. For example, persons engaged in making payday loan purchases in Illinois must purchase a bond in the amount of $50,000 for each branch location. On the other hand, in California, financial lenders and brokers must post a $25,000 bond prior to conducting business. Select your state below to learn more information about payday loan bonds relative to your area or call 1 (800) 308-4358 to speak with a surety expert.
Why Would I Need a Payday Loan Bond?
In several states, business owners are required to purchase a payday loan bond before they can receive their payday loan business license. If an employee of your lending company doesn’t perform the agreed upon services or fails to carry out a particular agreement, a claim can be filed against the bond.
Consumers in need of a payday loan should always work with a bonded lending company to ensure the broker will appropriate the borrower’s funds correctly and ethically upon payment. It’s important for payday loan brokers and lending companies to post a small loan license surety bond. The reason for this is to instill confidence in your customers that you will perform your duties in accordance with the law.
What are the Next Steps?
To apply for your small loan license bond, contact a SuretyBonds.com surety specialist online or give us a call. You will typically get your free, no obligation price quote within one business day of submitting your application.