Installment loans in New Jersey are offered by banks, credit unions, and licensed consumer lenders. Make sure scheduled payments work for you before proceeding. New Jersey's consumer lender rules offer certain protections, but one advertised rate limit does not apply to all products. Make sure you understand the creditor's identity, the loan category, and the written terms.
Identify the lender and the type of loan
Under the Department of Banking and Insurance's consumer-lending category, a loan cannot exceed $50,000 and must be mainly for personal needs, family expenses, or household use. Repayment may be scheduled as a single payment or spread across several installments. A consumer-lending license alone does not permit either first-lien or second-lien residential mortgage lending. The $50,000 threshold defines this licensing category; it does not mean a borrower will qualify for that amount.
Check the consumer-lender information from the Department to verify the creditor's legal name and authorization. Then, use the Department's licensing resources to verify the creditor's authorization. A credit union or bank making the loan does not mean it must have the same nonbank license. Additionally, verify the bank or credit union's charter and regulator. A company based outside of New Jersey can still need authority to serve New Jersey borrowers.
Distinguish the creditor from a website that passes along a request. SlickCashLoan is a loan matching service and not a lender. The creditor determines the approval decision and the terms of the loan. Check what company will receive your information and which company will be named in the agreement.
How New Jersey's rate rules affect a comparison
The Consumer Finance Licensing Act enables covered consumer lenders to agree to rates for the loans governed by the Act. New Jersey's criminal usury law generally limits rates to 30% for non-corporate borrowers for loans governed by New Jersey law. The Department explains the connection between civil usury rules and preemption in its personal finance guidance.
Do not treat 30% as an advertised rate, a guarantee of lawful pricing, or an APR ceiling for every lender. Circumstances can vary. Depending on applicable federal law, a lender's status, and the type of credit offered, the analysis can change. If a lender's offer appears to be in violation of New Jersey laws, do not rely on a lender's website for an explanation; rather, request that the Department review the actual lender and documents.
Section 17:11C-32 sets rules for computing interest for covered consumer loans. Interest is calculated on unpaid principal and is not allowed to be compounded. Payments are to be applied when received, and interest is charged for the actual days elapsed since the last payment. Each installment of a loan need not be at a fixed rate. Covered closed-end contracts are allowed to provide for index-based rate changes, subject to the restrictions of the statute.
Read the written disclosures alongside the offer
For a covered closed-end consumer loan, section 17:11C-34 requires a statement identifying the loan amount, date and maturity, any security, the borrower and licensee, the payment schedule, interest charges, and the annual percentage rate. The Consumer Finance Licensing Act amendments set out those requirements and the payment protections below.
Compare payments after you've traced the funds. Money withheld for a charge or paid to another creditor will cause the deposit to not match the beginning balance. The loan agreement should explain where the funds are being paid and the obligations being accepted.
Look at the APR and the interest rate, separately list all charges, and total all payments. The APR expresses the cost of the borrowing for a year, while the total payments show the amount of all the scheduled installments. You need to look for charges that are associated with a late or returned payment separately. A lower monthly payment can cost more if the term of the loan is longer.
With a variable rate, determine what index the offer is tied to, how that index may impact the payment or the remaining term of the offer. Do not assume the payment will be regular and unchanged. Always compare the Final Written Terms to any earlier quotations, and have any errors corrected before signing.
Extra payments and paying off the balance
A licensed consumer lender must allow for the advance payment of any amount at any time on a covered closed-end consumer loan. The lender may first apply the payment to interest accrued at the agreed rate through the payment date. Ask how the remainder reduces principal, and whether the next installment is still due.
For a full payoff, request a quote for a specified date. After repayment, the covered lender has to mark the obligation paid or canceled and release security that no longer secures an obligation. Keep the payoff confirmation and the evidence of release where collateral was pledged.
With cash payments, the covered lender is required to give a receipt showing the amount that was applied to interest and principal and the remaining unpaid balance. Keep receipts to compare with account statements.
Preparing a request and judging the schedule
A lender may request various documents such as your ID, NJ residence information, income, and account records. Credit review and document requirement practices vary. Ask about the type and timing of any credit inquiry before authorizing it. An online request, prequalification, or high income does not mean you will be approved.
Ensure you consider all sources of income and when they become available. Compare all of your due dates with this, especially when making provision for your final payment. Consider the cost of housing and food, transport, meeting your existing debts, and irregular bills for the entire period for which you are making provision. Only include what you reasonably can expect to happen.
Before agreeing to another obligation for a bill, find out from the biller about a payment arrangement. If there is a problem making a payment on a loan, contact the creditor as soon as possible to agree to a change, and get the change in writing. A change in the withdrawal date does not necessarily change the due date of the loan.