People in need for quick cash often go with the option of taking a cash advance loan. These are the short-term loans, and since they are unsecured they ask for high interest rate. But, in spite of the problem of high interest people don’t shy away from using this option. However, if you are interested in using this option it is important to spend some time in learning a bit more about policies and usury caps associated with payday lending.

Different states have different policies regarding payday loan system. It is legal in 37 states. In 12 states including Connecticut and Georgia, it is either illegal or not practicable due to strict state law. When not plainly forbidden, you can find these loans with specific usury laws and interest rate limit. Different types of usury laws are now in practice to stop these lenders from taking advantage of person's bad situations.

Since no system is completely effective, you are going to see many lenders who often find a way to bypass these usury laws. In many states, these lenders achieve this task by co-operating with state banks. These lenders try to co-operate with those banks where no usury caps are available on these types of loans. For instance, South Dakota is a place where there is no usury cap. These lenders get in touch with those banks and start to charge a higher interest rate than they are allowed to charge in a specific state. 

A law was passed in Oct 2006 by The United States Congress according to which the interest on loans forwarded to military personnel would not be limited to 36%. This is to make it sure that no military personnel get hurt by these loan sharks who just want to take advantage of the entire situation. With this law in action, it has become quite easier for different military people to secure short term loans at lower rates.

In May 2009, the Congress took some other steps to make things better for most Americans. A reform was introduced during this time according to which no lender would be able to use different unjust moves to charge borrowers with higher interest rate. This reform has also affected the credit card interest rates, which is really a relief for most Americans. And it is supposed that these reforms are surely going to help people get out of credit crunch. Now, it is quite fascinating to see President Obama talking about cap of 36% on short-term loans.

The bottom line is that America's relation with payday loans and usury caps is quite old. Different types of regulations were being introduced by government to stop these lenders taking unjust steps. So what would happen if a law or legislation is passed which introduces usury cap? Millions of distressed American homeowners could stay in their homes and property values would soar. Doesn’t sound too bad, does it?