Get Started Now image

By clicking on "Get Started!", I agree to the Terms of Use, Privacy Policy and ESIGN Consent

Which States Are Payday Loans Legal And Offered?

Payday loans have been legalized in 37 states, but they are illegal in 13 states. California, Texas, and Nevada are the top states for payday loans.

The interest rates on payday loans have been set by four states: Colorado, Montana and New Hampshire.

Are payday loans expensive?

Payday loans allow Americans to quickly get cash when they need it. Although they can be extremely helpful in financial emergencies, lenders have been accused of being unfair to borrowers. 
Payday loans and similar loans are illegal in some states. We have compiled some information about the laws governing payday loans in the USA.

Is it legal to get payday loans in my state

Payday lending laws vary from one state to the next. It all depends on how each consumer protection agency handles high-risk borrowing.
This guide will provide information on state payday lending regulations.

What States are Payday Loans Legal in?

Legal
Payday lending is legalized in 37 states, including Alabama, Colorado and California.
Illegal
Payday lending is currently prohibited in Arizona, Arkansas and Connecticut.
high-cost payday loans are allowed by some state laws. The protection of high-cost payday loans is provided for by fifteen states. There are reasonable loan rate caps and other prohibitions. 
For less costly loans, three states have lower rate caps and longer terms. Online payday lenders are subject to state licensing laws and rate caps in the state where the borrower is receiving the loan. 

Payday loans in the USA

Payday loan interest rates have been limited in four states. The annual interest rate cap for Colorado, Montana and New Hampshire is 36%. There are no additional fees.

Federal law also stipulates that payday loans are subject to a 36% cap for military personnel.

What is the future of payday loans in the USA

In recent years, more states have taken steps to increase or pass legislation governing payday lending. As of 2020, there are 21 states with pending legislation regarding payday lending and other payday lending options.
 Puerto Rico also has new payday loan laws in progress. The inauguration of November saw Nebraskans vote to increase the cap on payday loans. Utah‘s legislation dealt with reporting and registration requirements as well as operational requirements.
Virginia is among the states that have passed tighter legislation regarding payday loans. Virginia’s enactment has replaced payday loans by the term “short term loans”. This action also set a cap on the annual interest and fees for short-term loans at 36% plus a maintenance fee. The maximum loan value was increased from $500 to $2,500. It also established a minimum term of four months with exceptions and a maximum duration of 24 months.

How do I find out if a payday lender in my state is licensed?

Check to see if the lender holds a license issued by the state. The license should be visible in two ways: as a physical copy at your storefront or as an image on the website for payday loans. Ask the lender if you are unable to see the license.
You can check the license with your state attorney or financial regulation office if you’re still not sure.

What to watch out for

Payday loans that are illegally advertised should be a red flag. Unfortunately, there are still predatory lenders who will offer unlicensed and illegal payday loans. By imposing fees and interest rates that are much higher than the legal limit, they often trap borrowers in a vicious cycle of debt.
For more information about how to proceed if you believe you have fallen for a payday loan fraud, please contact your state attorney general and the police.

Tags

payday loans
south dakota
consumer financial protection bureau
small loan
annual rates
loan costs
district of columbia
north carolina
annual percentage rate