The state of Utah recognizes about 1,140 consumer lenders operating in the state. The Utah Department of Financial Institutions (DFI) is responsible for chartering, regulating, and examining all these companies.
If you plan to take out a payday or a title loan in Provo or Sandy, for example, it is smart that you get to know the basics of Utah’s lending laws. In doing so, you will be able to identify red flags even from afar.
Under the Act, it is illegal for a lender to operate if they are not registered with the DFI or their registration has already expired. The law also requires title lending officers to provide a complete schedule of interest rates, including annual percentage rates.
You would know if the lender is complying with the law if they provide a written contract containing payment details in dollar amounts and the name and address of the agent, plus other required information. Additionally, a lender may not rollover a title loan unless the borrower specifically requests it.
States like Arkansas, Maryland, and New York have banned payday loans. In Utah, however, this lending option is legal. Though, there are laws that regulate it. For example, ten weeks is the maximum time period to take out a payday loan.
The state allows lenders to roll over loans if the term is less than ten weeks.
The state does not set an interest rate limit, but it has an “unconscionability provision” provided for in the Section 70C-7-106 of the Utah Code. An unconscionable agreement means the lender is setting an excessive amount of interest rate. This can go to court, in which both the lender and the borrower should provide evidence.
If any part of the credit agreement is proven to be unconscionable, the violating lender is penalized with an amount ranging from $100 to $5000 dollars, on top of other legal fees.
Before making any financial decisions, big or small, you should tread carefully. With knowledge of the lending law, borrowers in Utah can save themselves from more financial troubles.