Payday Loans Cash Advance Consumer Guide

The objective payday loan and cash advance consumer resource

   

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Usury Payday Loan Law


What are the laws governing the payday loan and cash advance industry?

 

Federal laws governing small loans were first developed in the early part of the twentieth century. These laws arose in response to the problem of loan sharking. Today, payday loans are regulated under state laws. Whether or not a payday or cash advance is legal where you live, depends on the laws and regulations of your state. In some states, small loan rates have annual interest caps and require installment repayment schedules. There are also some states that have created criminal usury laws that make it impossible for payday loans to exist. In other states, the state legislatures have either exempted the payday loan industry from the small loan and criminal usury rate caps, or they have completely eliminated these caps. In states where the caps have been eliminated entirely, payday loan and cash advance lenders can charge unlimited interest rates.

 

There are currently 23 states as well as the District of Columbia that have created state laws to specifically legalize and regulate payday loans and cash advances. In these states, payday loan companies typically have to be licensed and registered with the state. In some states, the payday loan companies additionally have to either be bonded or maintain a minimum amount of net worth. These states typically have restrictions on payday loans such as maximum fees, maximum terms, maximum payday loan amount, and maximum interest rates on payday loans. Some of these states also have additional restrictions on payday loans. These additional restrictions include prohibiting payday loan rollovers, a maximum number of payday loans that any consumer may have at any given time, and prohibiting payday loan companies from filing criminal charges against consumers who fail to pay their debts. These states are Arkansas, California, Colorado, the District of Columbia, Florida, Hawaii, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Utah, Washington, and Wyoming.

 

There are 18 states that cap annual interest rates for payday loans at 36%.  These states also have laws that restrict payday loans in several other ways. They have laws that restrict the maximum payday loan amount, the maximum or minimum term for the payday loan, and the maximum fees and charges on payday loans. They also have laws that control the payday loan companies themselves and how they operate. These states have laws that require special licensing for payday loan companies, that charge payday loan companies fines when excessive interest rates are charged or other laws are violated, and that may require payday loan companies to carry insurance and to file annual reports. These states are Alabama, Alaska, Arizona, Connecticut, Georgia, Maine, Maryland, Massachusetts, Michigan, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, Texas, Vermont, Virginia and West Virginia.

 

There are 9 states that have no caps on annual interest rates for payday loans. In these states, payday loan companies can charge any interest rate and any fees that the consumer agrees to pay. These states are Delaware, Idaho, Illinois, Indiana, New Hampshire, New Mexico, Oregon, South Dakota, and Wisconsin.

 

 

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Getting a Payday Loan in FL

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming