Payday Loans in California: Subprime Report

At a Glance
California, USA
  • Nickname: The Golden State
  • Population: 39.56 million
  • Capital: Sacramento
  • Website:

While California may be home to some America’s richest and most famous people, the cost of living in the Golden State is undeniably too high for many of its residents. The state had a poverty rate of 13.3% in 2017, and the suggested yearly income to live in the capital city of Sacramento is $125,400. In San Diego, that number is even higher: $135,648. Want to live comfortably in Los Angeles? You’ll need to make $141,408 a year. And then there’s San Francisco—at an average annual income of $153,552, it’s no wonder people in the Bay Area are often looking for loans to make ends meet.

Average Credit Card Debt and Median Household Income in California vs. the U.S.
Average Credit Card Debt (Q1 2019)
Median Household Income (2018)

Payday Loans in California

If you’re trying to keep up with the cost living in California, be careful not to fall into the payday loan trap.

A payday loan is a type of  personal loan that comes with short repayment terms and incredibly high APRs. They are aimed at customers who have poor credit or no credit. In California, the typical payday loan has a term of only 2 weeks and an APR of 459%. Theoretically, they are meant to be paid off on the customer’s next pay day (hence the name), but the reality of payday loans is far more complicated.

Many consumer advocacy groups advise people to stay away from these supposedly “quick fixes.” Liana Molina of the California Reinvestment Coalition says that these predatory loans are “exploiting people’s financial hardships. You can’t make a rational decision when you’re in a moment of crisis.” Advertised as quick, one-time fixes for financial emergencies, the reality of payday loans in California relies on a system built on repeat customers.

According to the California Department of Business Oversight (DBO), in 2015, there were nearly 43% more Californians (462,334) who borrowed ten or more payday loans than there were customers who only borrowed one (323,870). In that same year, 64% of payday loan fees were generated by customers who took out seven or more payday loans. In fact, the DBO found that repeat payday loan transactions make up about 76% of the total number of payday loans in 2015 and that 47% of these were made on the same day that the previous transactions ended.

The DBO has also reported that payday loan storefronts (as of March 2016) tended to be more prevalent in poverty-stricken areas. They also found that areas with more payday loan storefronts were more highly represented by blacks and Latinos (and less represented by whites).

And shockingly, an increasing number of seniors in California are taking out high-interest payday loans. The DBO indicates that “Californians 62 and older accounted for 23.4% of the 2016 total, and they took out nearly 2.7 million loans, a nearly three-fold increase from the previous year.” This is particularly disturbing given the many negative impacts associated with payday loans, including bankruptcy.

Title Loans in California

Payday loans are not the only type of predatory loan that is making lives harder in the Golden State. Car title loans in California pose an equal threat to consumers.

Like payday loans, title loans are typically short-term loans, with an average loan term of 1 month. Unlike payday loans, title loans are secured by collateral, namely the title to the borrower’s motor vehicle. If a borrower cannot repay the loan when it is due or is unable to extend the loan term (usually incurring additional fees and interest), the lender has the right to repossess the borrower’s car.

In 2013 alone, 91,505 title loans totaling $334.8 million were taken out in California (an increase from about 38,000 title loans in 2011). Those loans came with an incredible $239 million in fees, placing California alongside Alabama, Ohio, Illinois, Mississippi, and Texas in the top six states for short-term loan fee volume. In 2015, 16,989 car title loans in California resulted in borrowers’ cars being repossessed.

Consumer Protection in California

If you live in California and need emergency cash via a payday or title loan, use extreme caution and make sure to educate yourself.

If you have been victimized by a predatory payday or title lender in California, contact the California Department of Business Oversight (DBO) by calling 1-866-275-2677 to file a complaint. You can also complete the DBO’s complaint form online.

The California Department of Business Oversight (DBO) information:

  • Address: Financial Services Division 1515 K Street, Suite 200 Sacramento, CA 95814
  • Phone: (866) 275-2677
  • Website:


Guides to Payday and Title Lending in California Cities

Payday and title loans are a big issue for California residents. And it gets even more complicated at the city level. Check out these payday and title loan guides to the following cities in California:

Anaheim | Bakersfield | Chico | Fresno | Los Angeles | Modesto | Oakland | Redding | Riverside | Sacramento | San Diego | San Francisco | San Jose | Santa Barbara | Stockton