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The 2016 State-by-State Payday Loan Regulation Guide


Most people today understand that predatory loans — like payday and title loans — are costly and dangerous. But there’s a large segment of the U.S. that relies on them to pay for basic necessities like food and medical expenses. Some people feel that they have no other options. Others simply don’t realize how costly these options can be.

On average, payday loans cost borrowers over 300% annual perceantage rate (APR).[1] This means that if you had a $500 payday loan for one year, you would pay back $1,500 — three times as much as you borrowed. But concepts like APR can be confusing, and loan agreements are loaded with them. Here are the basic ones you need to look for — and know — to avoid predatory lenders.

APR

APR stands for “annual percentage rate.” It is the total amount of interest that you would pay if you had the loan for one calendar year. Lenders may tell you what your monthly interest is, but it’s important to make sure you know the APR any time you take out a loan or credit card. The APR will include all fees and interest associated with the loan, whereas the monthly interest is just a small portion of that.[2]

Quick tip: Always know the APR before accepting a loan or credit card, then compare it to other options.

Term

The term of a loan is the length of time that you’ll be repaying it. The average payday loan term is about two weeks. Short-term loans typically have higher APRs, and loans with terms less than a month are probably not very safe. Many borrowers have trouble repaying them in such a short amount of time, and this is how payday lenders trap them — when borrowers can’t repay the loan by the date it’s due, they will likely be offered an extension and charged additional interest and fees.[3]

Quick tip: Opt for a longer term so you have more time to repay your loan.

Rollover

Rollover is the practice of extending the loan for another term and charging additional fees and interest. This is what most payday lenders will offer if you are unable to repay the loan in full at the end of the term. The lender will most likely ask you to pay the interest for the first term and extend the loan into a second term. This means that you haven’t actually paid off any of the principal by the time you start the next term. Unfortunately, rollover is an extremely common practice in payday lending. Payday loan borrowers take out an average of eight to thirteen loans per year from one lender. This is how lenders trap borrowers in cycles of debt.[3]

Quick tip: Avoid rolling your loans over into new terms to avoid additional fees and interest.

Criminal Action

Defaulting on payday loans can have many consequences. If you fail to pay your loan back, a collection agency will likely begin making harassing calls to your phone. Depending on where you live, the lender may be able to sue you to get their money back. You may even end up having your wages garnished to pay off your debt. Some states allow criminal penalties for failure to repay loans, while others prohibit the practice.[3]

Quick tip: Familiarize yourself with the laws and regulations in your state.

Once you have a basic understanding of the terms and practices of payday lenders, it’s important to take note of the laws in your specific area. Below is a state-by-state guide to payday loan laws:

Alabama Payday Loan Regulations

Maximum Loan Amount: $500
Term: 10-31 days
APR (14-Day): 456.25%
Rollovers: 1 permitted
Criminal Action: Mostly prohibited
More information: Alabama Banking Department
Resources: Avoiding Alabama Title & Payday Loans

Alaska Payday Loan Regulations

Maximum Loan Amount: $500
Term: Min 14 days
APR (14-Day): 520%
Rollovers: 2 permitted
Criminal Action: Mostly prohibited
More information: Alaska Division of Banking and Securities

Arizona Payday Loan Regulations

Payday loans prohibited. Small loan rate cap: 36% annually plus 5% fee.
More information: Arizona Department of Financial Institutions

Arkansas Payday Loan Regulations

Payday Loans Prohibited. Small loan rate cap: 17% annually.
More information: Office of the Attorney General

California Payday Loan Regulations

Maximum Loan Amount: $300
Term: Max 31 days
APR (14-Day): 459%
Rollovers: None permitted
Criminal Action: Prohibited
More information: California Department of Corporations
Resources: Avoiding California Title & Payday Loans

Colorado Payday Loan Regulations

Maximum Loan Amount: $500
Term: Min 6 months
APR (14-Day): Colorado APR: 20% for $0-$300 plus 7.5% for $301-$500 plus 45% for each year, plus monthly fee of $7.50 per $100 up to $30, after first month.
Rollovers: 1 permitted at 45% interest
Criminal Action: Mostly prohibited
More information: Colorado Office of the Attorney General

Connecticut Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 30.03% APR.
More information: Connecticut Department of Banking

Delaware Payday Loan Regulations

Maximum Loan Amount: $500
Term: Max 60 days
APR (14-Day): No limit
Rollovers: 4 permitted
Criminal Action: Prohibited
More information: Delaware Office of the State Bank Commissioner
Resources: Avoiding Delaware Title & Payday Loans

Florida Payday Loan Regulations

Maximum Loan Amount: $500
Term: 7-31 days
APR (14-Day): 419%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Florida Office of Financial Regulation

Georgia Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 16% per year.
More information: Georgia Consumer Protection Unit
Resources: Avoiding Georgia Title & Payday Loans

Hawaii Payday Loan Regulations

Maximum Loan Amount: $600
Term: Max 32 days
APR (14-Day): 459%
Rollovers: None permitted
Criminal Action: Mostly prohibited
More information: Department of Commerce and Consumer Affairs

Idaho Payday Loan Regulations

Maximum Loan Amount: $1,000
Term: Not specified
APR (14-Day): No limit
Rollovers: 3 permitted
Criminal Action: Prohibited
More information: Idaho Department of Finance
Resources: Avoiding Idaho Title & Payday Loans

Illinois Payday Loan Regulations

Maximum Loan Amount: Lesser of $1,000 or 25% gross monthly income
Term: 13-45 days
APR (14-Day): 403%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Illinois Division of Financial Institution
Resources: Avoiding Illinois Title & Payday Loans

Indiana Payday Loan Regulations

Maximum Loan Amount: $550 (can’t exceed 20% of gross monthly income)
Term: Min 14 days
APR (14-Day): 390%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Indiana Department of Financial Institutions

Iowa Payday Loan Regulations

Maximum Loan Amount: $500
Term: Max 31 days
APR (14-Day): 433%
Rollovers: None permitted
Criminal Action: Not specified
More information: Iowa Division of Banking

Kansas Payday Loan Regulations

Maximum Loan Amount: $500
Term: 7-30 days
APR (14-Day): 390%
Rollovers: Not specified
Criminal Action: Prohibited
More information: Office of the State Bank Commissioner
Resources: Avoiding Kansas Title & Payday Loans

Kentucky Payday Loan Regulations

Maximum Loan Amount: $500
Term: 14-60 days
APR (14-Day): 459%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Kentucky Office of Financial Institutions

Louisiana Payday Loan Regulations

Maximum Loan Amount: $350
Term: Max 60 days
APR (14-Day): 780%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Louisiana Office of Financial Institutions

Maine Payday Loan Regulations

Payday loans only permitted for supervised lenders. Small loan rate cap 30% per year on amounts up to $2,000.
More information: Maine Office of Consumer Credit Regulation

Massachusetts Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 23% plus $20 administrative fee.
More information: Massachusetts Division of Banks

Michigan Payday Loan Regulations

Maximum Loan Amount: $600
Term: Max 31 days
APR (14-Day): 390%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Michigan Office of Financial Insurance Regulation

Minnesota Payday Loan Regulations

Maximum Loan Amount: $350
Term: Max 30 days
APR (14-Day): 390%
Rollovers: None permitted
Criminal Action: Not specified
More information: Minnesota Department of Commerce

Mississippi Payday Loan Regulations

Maximum Loan Amount: $500
Term: $0-$250 Max of 30 days; $250-$500 28-30 days
APR (14-Day): 520%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Mississippi Department of Banking & Consumer Finance

Missouri Payday Loan Regulations

Maximum Loan Amount: $500
Term: 14-31 days
APR (14-Day): 1950%
Rollovers: 6 permitted
Criminal Action: Mostly prohibited
More information: Missouri Division of Finance
Resources: Avoiding Missouri Title & Payday Loans

Montana Payday Loan Regulations

Payday loans restricted. Small loan rate cap 36%.
More information: Division of Banking and Financial Institutions

Nebraska Payday Loan Regulations

Maximum Loan Amount: $500
Term: Max 34 days
APR (14-Day): 459%
Rollovers: None permitted
Criminal Action: Not specified
More information: Nebraska Department of Banking & Finance

Nevada Payday Loan Regulations

Maximum Loan Amount: 25% of expected gross monthly income
Term: Max 35 days; up to 90 with installment payments
APR (14-Day): No limit
Rollovers: Not specified
Criminal Action: Mostly prohibited
More information: Nevada Financial Institutions Division

New Hampshire Payday Loan Regulations

Maximum Loan Amount: $500
Term: 7-30 days
APR (14-Day): 36%
Rollovers: None permitted
Criminal Action: Prohibited
More information: New Hampshire State Banking Department

New Jersey Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 30%.
More information: New Jersey Department of Banking and Insurance

New Mexico Payday Loan Regulations

Maximum Loan Amount: $2,500
Term: 14-35 days
APR (14-Day): 416%
Rollovers: None permitted
Criminal Action: Prohibited
More information: New Mexico Financial Institutions Division
Resources: Avoiding New Mexico Title & Payday Loans

New York Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 25% per year.
More information: New York State Department of Financial Services

North Carolina Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 36%.
More information: North Carolina Attorney General

North Dakota Payday Loan Regulations

Maximum Loan Amount: $500
Term: Max 60 days
APR (14-Day): 520%
Rollovers: 1 permitted
Criminal Action: Mostly prohibited
More information: North Dakota Department of Financial Institutions

Ohio Payday Loan Regulations

Maximum Loan Amount: $500
Term: Min 31 days
APR (14-Day): 28%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Ohio Division of Financial Institutions
Resources: Avoiding Ohio Title & Payday Loans

Oklahoma Payday Loan Regulations

Maximum Loan Amount: $500
Term: 12-45 days
APR (14-Day): 390%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Oklahoma Department of Consumer Credit

Oregon Payday Loan Regulations

Maximum Loan Amount: Not specified
Term: Min 31 days
APR (14-Day): 156%
Rollovers: 2 permitted
Criminal Action: Prohibited; Civil penalties allowed
More information: Oregon Department of Consumer & Business Services

Pennsylvania Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 11% per year.
More information: Pennsylvania Department of Banking

Rhode Island Payday Loan Regulations

Maximum Loan Amount: $500
Term: Min 13 days
APR (14-Day): 260%
Rollovers: 1 permitted
Criminal Action: Not specified
More information: Rhode Island Department of Business Regulation

South Carolina Payday Loan Regulations

Maximum Loan Amount: $550
Term: Max 31 days
APR (14-Day): 390%
Rollovers: None permitted
Criminal Action: Prohibited
More information: South Carolina State Board of Financial Institutions
Resources: Avoiding South Carolina Title & Payday Loans

South Dakota Payday Loan Regulations

Maximum Loan Amount: $500
Term: Not specified
APR (14-Day): No limit
Rollovers: 4 permitted
Criminal Action: Not specified
More information: South Dakota Division of Banking

Tennessee Payday Loan Regulations

Maximum Loan Amount: $500
Term: Max 31 days
APR (14-Day): 459%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Tennessee Department of Financial Institutions
Resources: Avoiding Tennessee Title & Payday Loans

Texas Payday Loan Regulations

Maximum Loan Amount: Not specified
Term: 7-31 days
APR (14-Day): 309.47%
Rollovers: None permitted
Criminal Action: Not specified
More information: Texas Office of Consumer Credit Commissioner
Resources: Avoiding Texas Title & Payday Loans

Utah Payday Loan Regulations

Maximum Loan Amount: No limit
Term: No longer than 10 weeks
APR (14-Day): No limit
Rollovers: Not specified
Criminal Action: Not specified
More information: Utah Department of Financial Institutions
Resources: Avoiding Utah Title & Payday Loans

Vermont Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 18% per year.
More information: Vermont Banking Division

Virginia Payday Loan Regulations

Maximum Loan Amount: $500
Term: Min 2 pay periods
APR (14-Day): 687.76%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Virginia Bureau of Financial Institutions
Resources: Avoiding Virginia Title & Payday Loans

Washington Payday Loan Regulations

Maximum Loan Amount: Lesser of $700 or 30% of gross monthly income
Term: Max 45 days
APR (14-Day): 390%
Rollovers: None permitted
Criminal Action: Prohibited
More information: Washington Department of Financial Institutions

West Virginia Payday Loan Regulations

Payday loans prohibited. Small loan rate cap 31% per year on loans of $2,000 or less.
More information: Office of West Virginia Attorney General

Wisconsin Payday Loan Regulations

Maximum Loan Amount: Lesser of $1,500 or 35% gross monthly income
Term: Max 90 days
APR (14-Day): No limit
Rollovers: 1 permitted
Criminal Action: Prohibited
More information: Wisconsin Department of Financial Institutions
Resources: Avoiding Wisconsin Title & Payday Loans

Wyoming Payday Loan Regulations

Maximum Loan Amount: Not specified
Term: Max 30 days
APR (14-Day): 780%
Rollovers: None permitted
Criminal Action: Mostly prohibited
More information: Wyoming Division of Banking

If you’re struggling to find the cash you need, and you think your only option is a payday loan — think again. OppLoans is your trusted, safe, affordable alternative to dangerous, predatory lenders. Our loans are cheaper than payday, and our repayment terms are longer. So you don’t have to worry about falling into a deep cycle of debt. At OppLoans, customer service is our top priority, and we’re here to help every step of the way. Apply for a better personal loan today at OppLoans.com!

*All state payday loan legal information courtesy of Consumer Federation of America. “Payday Loan Consumer Information” CFA. Accessed September 15, 2016. http://www.paydayloaninfo.org/state-information

References:

  1. Standaert, Diane. “Payday Loan Quick Facts: Debt Trap by Design.” Center for Responsible Lending. July, 2014. Accessed September 22, 2016. http://www.responsiblelending.org/payday-lending/payday_loans_quickfacts.pdf
  2. “Annual Percentage Rate” RedFin. Accessed September 22, 2016. https://www.redfin.com/definition/APR
  3. “How Payday Loans Work.” CFA Payday Loan Consumer Information. Accessed September 22, 2016. http://www.paydayloaninfo.org/facts