PIERRE, S.D. (KELO AM) – After the holidays, many people may be in need of a little extra cash to catch up on bills. If you are considering taking out a short-term loan, make sure you understand the repayment terms of the loan you are applying for before you borrow money.
The Department of Labor and Regulation’s Division of Banking stresses the importance of understanding the types of loans available, the repayment terms and the general terms of the loan contract.
Money lenders licensed in South Dakota provide installment loans, payday loans, short-term consumer loans and title loans.
· Installment loans are loans made to be repaid in specified amounts over a certain number of months.
· Payday loans are short-maturity loans on the security of a check, any assignment of an interest in the account of a person at a depository institution, any authorization to debit the person's deposit account, any assignment of salary or wages payable to a person.
· Short-term consumer loans are loans to individual borrowers lasting six months or less.
· Title loans are loans secured by a nonpurchase money security interest in a motor vehicle and are scheduled to be repaid in a single installment.
“Single pay loans, such as payday loans or title loans, may result in additional charges to renew or extend the loan if you are unable to pay the balance in full at the due date,” said Division of Banking Director Bret Afdahl. “Do not assume you are taking out an installment loan that can be repaid in several payments over a period of time unless it is stated in the contract.”
If you have questions about loans, you may call the South Dakota Division of Banking at 605-773-3421 for additional information. For a list of South Dakota licensed lenders or to review money lending laws, visit http://dlr.sd.gov/banking/default.aspx.