Your Rights as a Modesto Borrower, With the Section Numbers

Modesto borrower rights on a payday advance are unusually specific, and almost none of them get mentioned at the counter. California does not merely cap the loan; it writes a short list of things the lender must do and must not do, and one of them — the free extension — is worth actual money to somebody who is about to miss a payment.

Six rights, and where each comes from

These are statutory. They are not lender policy and they are not negotiable.

• A free extension or payment plan. § 23036(b) lets a lender grant one and forbids any additional fee or charge of any kind for it.
• One capped bounce fee. § 23036(e) allows a returned-check fee of at most $15, and that single fee is the exclusive charge — no late fee on top.
• No criminal liability. § 23035(b) says you are not subject to any criminal penalty for failing to comply.
• No criminal process for collection. § 23035(d)(1) bars the lender from using it against you.
• Your own language. § 23035(g) requires the written agreement to be in the same language principally used in the conversation that sold it.
• No collateral. § 23037(b) prohibits taking any, and § 23035(c)(5) requires the notice to say so.

The free extension nobody mentions

This is the one to remember, because it is the difference between an expensive fortnight and a spiral.

Section 23036(b) permits a licensee to allow an extension of time or a payment plan on an existing transaction, and states that the lender may not charge any additional fee or charge of any kind in conjunction with it. Not a reduced fee. Not an administration charge. Nothing.

Two things follow. If you can see the repayment date coming and know you will not make it, ask before it arrives rather than after — the conversation is far easier while the check is still undeposited. And if a lender agrees to an extension and then adds a charge for it, that is a clean statutory violation and it is exactly what a DFPI complaint is for.

The wording does not force a lender to grant one. It governs the price if they do. In practice, asking costs nothing.

What the lender may not do

The prohibitions in § 23037 are the other half of the picture, and several of them describe tactics rather than abstractions.

• Reuse the same check for a later transaction, or let you pay off one advance with the proceeds of another — the rollover ban, § 23037(a).
• Take collateral of any kind, § 23037(b).
• Make the loan conditional on buying insurance or any other goods or services, § 23037(c).
• Alter the date or any other information on your check, § 23037(e).
• Take more than one check for a single transaction, § 23037(g).
• Hand you a form with blanks to be filled in after you have signed it, § 23037(h).

That last one deserves a moment. If you are asked to sign anything with an empty field in it, the answer is no, and the reason is in the statute.

Where the protections stop

Being honest about the edges is more useful than listing the rights alone.

There is no annual limit on how many advances you may take, only the rule that one may be outstanding at a time. Closing one on Friday and opening another on Monday is lawful, and it is the most common way a bounded product becomes an unbounded cost.

There is no statutory rescission period confirmed in this state — no guaranteed right to hand the cash back the next morning and walk away. Some lenders allow it; that is their policy, not your right, so ask before you sign if it matters to you.

And the one-at-a-time rule is enforced through licensing and examination rather than through a real-time statewide system. California has no such system; a bill to create one failed in 2013. The obligation is genuine and it sits on the lender, but nothing will physically block a second transaction at the moment it is attempted.

Rights that depend on which statute you are under

Everything above applies to a deferred deposit transaction. Step across to a licensed instalment loan and the list changes entirely, mostly for the better.

A loan made under the California Financing Law with a bona fide principal of $2,500 or more and less than $10,000 is capped at 36% plus the Federal Funds Rate, must run at least twelve months, may not carry a prepayment penalty, and must be reported to at least one nationwide credit bureau.

That last item is a right worth having. A payday advance is generally invisible to the bureaus, so repaying it perfectly does nothing for the price of your next loan. A covered instalment loan is the opposite. Ask which statute an offer is made under; the answer determines which of these two lists you are standing in.

Using them

Rights that live in a statute are worth nothing until somebody names them out loud, and lenders do not volunteer them.

Three sentences cover most situations. I would like an extension under section 23036(b), which cannot carry an additional charge. The returned-check fee is capped at $15 and is the exclusive charge, so please remove the late fee. Is this loan being made under the deferred deposit statute or the California Financing Law?

If a lender resists any of the three, keep the paperwork and file with the DFPI. It costs nothing, and a pattern of complaints is what examination and enforcement are built from. Confirm the lender is licensed at dfpi.ca.gov while you are there — against an unlicensed operator none of this is enforceable.

This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the California Department of Financial Protection and Innovation (DFPI), and read the fee disclosure in full.