Installment Loan Regulations & Laws - Missouri
- Missouri Division of Finance
- Harry S Truman State Office Building, Room 630
- P.O. Box 716
- Jefferson City, Missouri 65102
- Phone: 573.751.3242
- Fax: 573.751.9192
- Consumer Installment Loans
If you're searching for an online loan and comparing your options among loans and credit lines, maybe you've come across installment loans. These loans can be confused with other loans because of the term, "installment" which simply means they are paid off in portions instead of all at once. Mortgages, auto loans and business loans are also paid off in installments, but the installment loans referred to in this case are short-term loans made for people who usually don't qualify for regular personal loans or can't use credit cards to pay off expenses. They're also an alternative to payday loans and title loans.
Most people have come to understand that when you need a quick and easy loan to help you with your problems, you either get a payday loan or an auto title loan. But an installment loan actually has several advantages over both of these loans. Payday loans may be your choice for a quick few hundred dollars you can use until your paycheck comes in, and you don't need collateral to use them. The problem is the average payday loan is only $300, and you have to pay it back very quickly, often within two weeks. Auto title loans can be a little better because you can usually borrow more money with them, and you usually have about a month or sometimes longer to repay them. The problem is you have to use your car as collateral to get them which means if you don't repay them by the due date, it could be repossessed. If you go with an installment loan, you will be able to borrow more than you would with a payday loan, and it's usually as much as a title loan but without collateral. Plus, you have even more time to pay it off.
Installment loans aren't too difficult to get, but because they do have some risks that come with them, you should know about their laws and regulations. The states determine whether or not they're legal and who can run an installment loan business. The laws are pretty well articulated for installment loans in Missouri, and by getting to know them you can know how to be protected in situations where the lender may have committed fraud or deception.
How Missouri Installment Loans Are Designated By Law
Many states do not have laws on installment loans by name and have either just addressed payday loans and title loans, or they've left room for interpretation and left loopholes for installment loan lenders. Missouri, on the other hand actually does have specific laws for installment loans that are defined by the Division of Finance and are further clarified in legislative codes in 408.510 and 20 CSR 1140-13.010. Here's a few laws that clearly separate Missouri installment loans from payday loans:
- Payday loans in Missouri have a maximum term of 31 days while installment loans Missouri must have a minimum term of 120 days
- Payday loans are capped at $500 you can borrow while installment loans have no borrowing limits
- The fees a lender may charge for an installment loan are a bit different than what can be charged for a payday loan
Anyone offering either a payday loan or installment loan has to be licensed by the Division of Finance in the State Department of Insurance, Financial Institutions and Professional Regulation. Included in the licensing is a law stating that lenders must clearly state all the charges, APR interest and all other payment-related issues in their loan contract.
What Laws Say About Borrowers Qualifying For Installment Loans
The laws in Missouri's books are mostly directed at the lenders themselves, but borrowers do need to make sure they meet all financial responsibility requirements that come with installment loans. The Consumer Financial Protection Bureau at the federal level has been working on rules that would make all licensed lenders in states where payday and installment loans are legal ask that borrowers show proof that they can repay those loans, though there has now been a proposal to delay these rules before they go into effect. Missouri laws have said that lenders should check on the borrower's ability to pay the loan, though they aren't necessarily required to see proof of income. However, many installment loans online do have fields in the application where you have to specify that you're employed or have a sufficient source of income.
How You Can Get An Installment Loan Quote And Apply For One
Installment loans have a similar application process to payday loans with the same kinds of personal information that needs to be submitted to qualify for them. Usually your credit score and history are not much of a factor, but they still could have a soft check by the lender to look at your spending habits. But you do need to be at least 18, show your sources of income and have an active checking account. The following documents are usually what you'll need:
- A driver's license, passport or other approved government-issued photo ID
- A monthly bank statement, pay stub, or other information detailing your income
- The information of your checking account including the bank's routing number
The first thing you'll want to do is fill in the short installment loan estimate form and find out how much you could borrow. Then, you'll be contacted and directed to complete the application to receive your online installment loan, and the approval decision is made within seconds. You should carefully read all details in your personal loan contract and make sure you know all fees, interest rates and installment payments before you sign paperwork.