State payday loan laws and regulations.

Most states have created rules and regulations that payday lenders need to adhere to. With many families taking on excessive debt, the laws that have been put into place by consumer protection bureaus or government regulators are meant to protect borrowers from excessively high fees and interest rates. They also tend to set the maximum amount that can be obtained from a payday lender.

If and when you do decide to take out a salary advance loan, but sure that you are dealing with a reputable lender, and be sure they follow all the laws and regulations that are in place in the state you live. These type of loans are already difficult enough to repay under ideal situations. You do not need the process to be any more difficult by illegal or questionable lending practices.

Since the process can be complicated, there may be times in which you want to speak to an attorney about predatory lending or payday loans to review the rules and regulations. Many states provide income eligible individuals with free legal advice, and attorneys can advise on these types of consumer debt issues. Click here to learn more.

 

 

State

Minimum / maximum payday loan term

Minimum / maximum payday loan amount

Finance charges and fees

Information on payday loan laws

Alabama 

10-31 days 

$500

17.5% of the total value of the payday loan 

After the initial payday loan period and one rollover with the same customer, the full outstanding amount of the loan, is due and payable. If the borrower is unable to repay the outstanding balance in full, the payday lender may then decide to offer the customer an extended repayment option of four equal monthly installments of the remaining balance that is due. If there are insufficient funds to pay a check on the date of presentment, the lender may charge an additional fee. (Alabama Deferred Presentment Services Act, Title 5, Chapter 18A)

 

 

 

 

 

Alaska

14 days minimum

$500

15% or the lesser of $15 per $100 loaned + $5 fee

S.B. 272 Signed by governor 6/29/04, (Chapter 116) Gives the Department of Community and Economic Development additional licensing and regulatory authority over payday lenders that operate in the state; the regulation also gives borrowers the right to rescind the advance without cost before the end of the following business day; prohibits onerous collection practices by both payday lenders and payday third-party collectors, including the threat of criminal charges; prohibits the acceptance of collateral other than a check or other instrument; and defines the additional disclosures that lenders are required to make to clearly describe the advances and their uses for the borrowers.

Arizona

5 days min.

$50-$500

15% of amount loaned by the payday lender

A borrower may have only one outstanding payday loan at one time and the face amount, exclusive of any fees, cannot be more than five hundred dollars with a maximum of three rollovers. Several bills and laws that were introduced in the 2005 Legislative Session amend requirements for payday lenders, and loans.

Arkansas

6-31 days

$400

10% of amount loaned + $10 fee max.

Senate Bill 948 amended existing law protecting the military, and some licensing requirements.

California

31 days

$300

15% of amount loaned

A.B. 207 introduced in 2005 prohibits the fee for some deferred deposit transactions from exceeding an effective annual rate greater than 10 percent; In addition, the state requires that a check from a customer for these deferred deposit transactions to be made payable to the actual name of the licensee; Prohibits a check that has been held by a licensee for more than 31 days from being presented to a bank for payment.

Colorado

40 days

$500

20% first $300; 7.5% of amount loaned in excess of $300

The law states that only one payday loan is allowed per borrower at a time.

Connecticut

 

 

 

The small loan laws of Connecticut permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay, so the rules do not impact the businesses that operate that much in the state. In addition, lenders must comply with other provisions of the state’s small loan act and regulations. This amounts to very large annual percentage rates.

Delaware

60 days

$500

No limit

The small loan laws of Delaware permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lenders that operate here need to also comply with other provisions of the state’s small loan act. This amounts to very large annual percentage rates. H.B. 152: enacted 7/12/05 sets fees/damages for bad checks and provides that damages or fees may not be obtained for pay-day loans, made by a bank or licensed payday lenders.

District of Columbia

31 days

$50 min; up to $1,000 per borrower

$5 on amounts up to $250; $10 face amounts $250.01 to $500; $15 on face amounts $500.01 to $750; and $20 on face amounts of $750.01 to $1,000+ fees

The District of Columbia passed statutes specifically authorizing payday lending. The interest rates and fees that lenders are permitted to charge amount to very large annual percentage rates. The APR for a 14-day $100 loan is 419%. Payday lenders are permitted to add additional fees for handling, processing and verification on a sliding scale based on the amount borrowed.

Florida

7-31 days

$500 exclusive of fees

10% max + $5 fee

Florida passed statutes and various payday lending laws that are specifically authorizing payday lending. The interest rates and fees that lenders are permitted to charge amount to very large annual percentage rates. The APR for a 14 day, $100 loan is 390%.

Georgia

 

$3,000 min

 

In general Georgia law prohibits the making of any loans of $3,000 or less if that loan violates Georgia's usury law. Payday lenders in Georgia are not permitted to loan borrowers less than $3,000 for more than 16% APR. A payday lender is permitted to charge 16% APR if it attempts to loan money directly to its customers and only then if the in-state lender holds more than a 50% interest in the revenues from the loan. However a state chartered bank operating under the laws of another state and insured by the FDIC, that is not operating in violation of the federal and state laws applicable to that state charter, is not limited by Georgia's 16% cap. (See Georgia Code Ann. 16-17-1 to 16-17-10).

Hawaii

32 days

$600

15% of face amount of the check

Hawaii passed statutes specifically authorizing payday lending. The interest rates and fees that lenders are permitted to charge amount to very large annual percentage rates. H.C.R. 172 authorizes a review of the registration of payday lenders.

 

 

 

 

 

Idaho

NA

$1,000

No limit

Idaho permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lenders must comply with other provisions of the state’s small loan act.

Illinois

13-45 days

The lesser of $1,000 or 25% of borrower's gross monthly income, whichever is less.

$15.50 per $100

Illinois permits payday lenders to operate in Illinois. Lenders must comply with other provisions of the state’s small loan act and may not make more than one loan to a borrower at any one time. The law caps the fee that can be charged to $15.50 per each $100. This amounts to a very high effective APR. The APR for a 14-day $100 loan is 403%. Payday lenders are regulated and licensed by the Division of Financial Institutions of the Department of Financial and Professional Regulation. The Payday Loan Reform Act (H.B. 1100) provides that the terms of loans, finance charges, renewals; revocations, suspensions, must be made available to the public.

Indiana

14 days min.

$50-$500 ( but may not exceed borrower’s gross income)

15% on amounts <$250; 13% $251-$400; 10% $410-$500

Indiana permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lenders must comply with other provisions of the state’s small loan act. Indiana (permits the charging of $33 rather than the 36% per annum applicable to other loans). The APR for a 14-day $100 loan is 390%

Iowa

31 days

$500

$15 on first $100; $10 on each $100 after 

Lender may make no loans for more than $500 to a borrower at any given time.

Kansas

7-30 days

$500

15% + administrative fee

A lender may not have more than two loans outstanding to the same borrower at any one time and may not make more than three loans to any one borrower within a 30 calendar day period. New legislation establishes limits on a payday lender’s ability to collect on payday loans from military borrowers:

* Lenders are prohibited from garnishing the wages of military borrowers;

* Lenders must defer all collection activity against a borrower who is deployed to combat or a combat support post for the duration of such posting; and

* Lenders may not contact any person in the military chain of command of a borrower in an attempt to make collection.

Kentucky

14-60 days

$500

$15 per $100 on amount loaned

 

Louisiana

60 days

$350

16.75% max. of amount loaned; $45 max fee

Louisiana laws in places require payday lenders to be licensed in the state. And rules prohibit them from attaching property when collecting on payday loans.

Maine

 

 

 

Maine permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lawmakers in Maine are considering approving changes to existing laws that would allow significant expansion of the payday loan industry. One of the proposed changes would allow lenders to charge as much as 17.5%, which would amount to $17.50 per $100. In addition, payday lenders are permitted to use advertising methods that are currently prohibited, and have greater leeway, in collection methods in the event of default than other types of creditors.

Maryland

 

 

 

Maryland requires payday lenders to comply with the state’s small loan or criminal usury laws. Basically, since the allowable interest rates and fees are much lower than what the payday industry usually charges, payday lenders in these states are probably operating illegally.

 

 

 

 

 

Massachusetts

 

 

 

Massachusetts state law requires that payday lenders need to comply with the state’s small loan or criminal usury laws. Basically, since the allowable interest rates and fees are much lower than what the payday industry usually charges, payday lenders in these states are probably operating illegally.

Michigan

<31 days

$600

15% or the first $100; 14% of amounts $100-200 13% of amounts $200 - $300; 12% of $300-400 the fourth $100; 11% of amounts $400-$600 plus administrative fees

New legislation, the Deferred Presentment Service Transactions Act (H.B. 4834)signed by Governor Granholm will regulate payday lending in Michigan by limiting loan amounts to 600 in a 31 day period and allow lenders to charge up to 15% depending on the size of the loan. Borrowers are allowed only one loan at a time. The law requires all payday lenders to be licensed by June 1, 2006, by the Office of Financial and Insurance Services. The law establishes a statewide database for lenders to determine if customers have other open transactions; and allows borrowers to file complaints with the state. The law permits payday lenders to charge service transaction and service fees for each transaction.

Minnesota

30 days

$350

Ranges from $5.50 for loans up to $50 to 6% + $5 for loans $250 to $350

(i) On any amount up to and including $50, a charge of $5.50 may be added; (ii) on amounts in excess of $50, but not more than $100, a charge may be added equal to ten percent of the loan proceeds plus a $5 administrative fee; (iii) on amounts in excess of $100, but not more than $250, a charge may be added equal to seven percent of the loan proceeds with a minimum of $10 plus a $5 administrative fee; (iv) for amounts in excess of $250 and not greater than $350, a charge may be added equal to six percent of the loan proceeds with a minimum of $17.50 plus a $5 administrative fee. After maturity, the contract rate must not exceed 2.75 percent per month of the remaining loan proceeds after the maturity date calculated at a rate of 1/30 of the monthly rate in the contract for each calendar day the balance is outstanding. (Minnesota Small Loans - Chapter 47.60)

Mississippi

30 days

$400

18% loan amount

Mississippi passed statutes specifically authorizing payday lending. The fees and interest rates amount to very large annual percentage rates. The APR for a 14-day $100 loan is 572%.

Missouri

14-31 days

$500

75%

Missouri passed statutes specifically authorizing payday lending. Lenders may not charge interest and fees in excess of 75% of the initial loan amount on any single authorized loan for the entire loan term and all authorized renewals. Otherwise, interest is set pursuant to small loan law which provides that parties may set rate by contract. The APR for a 14-day $100 loan is 1980%.

Montana

31 days

$50-$300

25% of face value of the check

The maximum loan cannot exceed $300 plus fees and the minimum amount is $50 plus fees. A loan cannot exceed 25% of the borrower's monthly net income (take-home pay). A borrower cannot have more than 2 loans at any one time with a single payday lender. The total of the two loans cannot exceed the $300 maximum. Payday lenders are prohibited from renewing, refinancing or consolidating payday loans. However a payday lender may extend the term of the loaned beyond the due date for no additional charge. S.B. 165 provides that a borrower has the right to rescind for one day after signing a payday loan agreement; and permits lenders to require arbitration.

Nebraska

31 days

$500

15% per $100

A payday lender may only loan $500 maximum to any one borrower at a time. Nebraska passed various regulations and statutes that are specifically authorizing payday lending.

Nevada

NA

Not to exceed 25% of the expected gross income of the borrower when the loan is made

NA

There are no statutory limits on fees that may be charged so long as the borrower agreed to those fees in writing. This amount to a very high APR. Payday lenders are licensed in Nevada.

New Hampshire

7-30 days

$500

Only interest may be charged on loans; No fees are permitted

New Hampshire permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lenders must comply with other provisions of the state’s small loan act. New Hampshire removed its interest rate cap effective 1/1/2000.

New Jersey

 

 

 

New Jersey does not have specific payday lending legislation and permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay.

New Mexico

NA

NA

No limit

New Mexico state law permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lenders must comply with other provisions of the state's small loan act.

New York

 

 

 

New York does not have specific payday lending legislation and permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay.

North Carolina

 

 

 

North Carolina passed statutes specifically authorizing payday lending. The fees and interest rates that payday lenders are permitted to charge amount to very large annual percentage rates. For example, North Carolina permits a 15% charge on a maximum loan amount of $300. This means that the consumer will receive $255 in cash and the lender will pocket a $45 fee. If a $300 loan at this rate is repaid in two weeks, the APR is about 458%.

North Dakota

60 days

$500

20% of loan plus database fee

The maximum rate of interest that can be charged on a $200 loan is 30%.

 

 

 

 

 

Ohio

6 months

$800

5% per month on unpaid balance plus $5 fee; plus $3.75 fee for every $50 above $500

The APR for a 14-day $100 loan is 390%. Ohio law does allow these type of high interest rate loans to be issued.

Oklahoma

12-45 days

$500

15% up to $300; 10% $300 to $500

Oklahoma passed statutes specifically authorizing payday lending. The fees and interest rates that payday lenders are permitted to charge amount to very large annual percentage rates. APR for a 14-day $100 loan is 390%.

Oregon

60 days

No more than 25% of net monthly income

No limit

New legislation enacted in 2006 (S.B. 1105), sets new restrictions on lenders by limiting the maximum rate of interest on payday loans, the amount of the loan origination fees; sets a minimum 31-day loan term for payday loans; prohibits charges other than interest, origination fees and fees for dishonored check or insufficient funds; prohibits the renewal of payday loans more than two times; prohibits a lender from making a new payday loan to a consumer within seven days of expiration of the previous payday loan; Limits the amount of the fee for a dishonored check or insufficient funds; prohibits recovery of statutory damages and attorney fees from consumers for dishonored checks; and grants rulemaking authority to Director of Department of Consumer and Business Services.

Pennsylvania

 

 

 

Pennsylvania state law does not have specific payday lending legislation and permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay.

Puerto Rico

 

 

 

Puerto Rico requires payday lenders to comply with the state’s small loan or criminal usury laws. Basically, since the allowable interest rates and fees are much lower than what the payday industry usually charges, payday lenders in these states are probably operating illegally.

Rhode Island

13 days min.

$500

15% of the face amount of the check

Rhode Island state law requires payday lenders to comply with the state’s small loan or criminal usury laws. The APR for a 14-day $100 loan is 390%.

South Carolina

31 days

$300

15% of the face amount of the check

South Carolina passed statutes authorizing payday lending. The fees and interest rates that payday lenders are permitted to charge amount to very large annual percentage rates. The APR for a 14-day $100 loan is 459%.

South Dakota

NA

$500

No limit

South Dakota permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. Lenders must comply with other provisions of the state’s small loan act. This amounts to very large annual percentage rates.

Tennessee

31 days

$500

15% of the face amount of the check

Tennessee passed statutes specifically authorizing payday lending. The fees and interest rates that payday lenders are permitted to charge amount to very large annual percentage rates. The effective APR for a 14-day $100 loan is 459%.

Texas

7-31 days

None

10% per loan plus 48% annual interest + $12 monthly fee

Texas does not have specific payday lending legislation and permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay. The effective APR for a 14-day $100 loan is 309%. S.B. 1479 protects military members and their families from some actions by payday lenders, and requires lenders to make special disclosures to military borrowers.

Utah

NA

None

No limit

Utah passed statutes authorizing payday lending. The fees that payday lenders may charge amount to very large annual percentage rates, although the rules state that there is a limit on the interest that can be charged on judgments related to a payday loans.

Vermont

 

 

 

Vermont does not have specific payday lending legislation or laws in place and it permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay.

Virgin Islands

 

$7,500

 

The Virgin Islands requires payday lenders to comply with the state's small loan law which maintain interest rate caps of up to 26% per annum. Basically since the allowable interest rates and fees are lower than that which the payday lenders usually charge, payday loans are not practical.

Virginia

7 days min.

$500

15% plus a fee for 6% late payments

 

 

 

 

 

 

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