Payday loans are legal in 37 US states. The most popular states for payday loans are California, Texas, and Nevada. Other locations include Alabama, Colorado and Ohio Payday Loans to name a few.
Payday loans offer a quick and easy way to get extra cash before your payday. They can be extremely beneficial if you encounter a financial emergency or incur unexpected expenses. Currently, there are over 20,000 stores where you can physically request and receive funds on the same day, and it is also possible to apply for a payday loan online.
Payday lenders are coming under increasing media scrutiny for charging high interest rates. As a result, payday loans are currently illegal in 13 states due to rules and regulations that prohibit lenders from offering quick cash. States that ban payday loans include Georgia, New York, and West Virginia.
Other states, such as Colorado, Montana and South Dakota, have set caps on payday loan interest rates to prevent the exploitation of their residents, with key legislation in place to prevent predatory lending.
This article breaks down the states where payday loans are legal or illegal and the types of laws where citizens can borrow money.
What are payday loans?
Payday loans offer a helpful type of short-term financing for customers who need money but can’t wait to pay an urgent expense until they get their next paycheck. The cash advance is intended to help someone get by until the end of the month, with the intention that they pay it back as soon as possible. Common reasons for using payday loans include the need to pay emergency expenses such as medical bills, dental bills, rent, funeral expenses, car repairs, or home renovations.
Private companies offer payday loans, lenders, startups and apps, they are usually not from banks. Loans for bad credit are also generally available.
Payday loans typically last between 2 weeks and 1 month, with the entire loan and interest usually paid in full on the borrower’s next payment date. There’s also normally the option of repaying your loan early – it’s just important to check the terms and conditions of your loan agreement and contact the lender to arrange this.
Since payday loans are often criticized for carrying rates ranging from 300% to 600% APRto make it easier to compare the price with other financial products, the interest rate is multiplied as if it were an annual product, which makes it seem much higher even if it only lasts a few days or a few weeks.
In which US states are payday loans legal?
There are currently 37 US states that allow payday loans, which means getting a payday loan is legal. The states are:
- District of Colombia
- New Hampshire
- North Dakota
- Rhode Island
- Caroline from the south
- South Dakota
What kinds of payday loan regulations exist?
Each state has its own laws regarding payday loans. For example, the maximum loan amount that can be borrowed at one time is $300 in California, $500 in states like Alabama, Alaska, Missouri, and New Hampshire, $1,000 in Delaware and $50,000 in Oregon.
Similarly, there is often a maximum loan term. For example, money cannot be borrowed for more than 13 days in Alaska, 31 days in Iowa, 32 days in Hawaii, and 60 days in Kentucky. Minimum loan terms also exist in states such as Alabama of at least 10 days and at least 14 days in Indiana.
Interest rate caps on payday loans have also been set in states like Colorado, Montana, New Hampshire and South Dakota. In these states, the annual interest rate limit on payday loans is 36% and all additional charges have been banned. On top of that, federal law also states that fees are capped at 36% for all service members, regardless of state.
In which US states are payday loans illegal?
There are currently 13 US states that ban payday loans, making it illegal to borrow money through a payday loan. These states are Arizona, Arkansas, Connecticut, District of Columbia, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia. .
How do I know if a payday lender is legally licensed in a US state?
To check if a payday lender is legally licensed before taking out a payday loan, check to see if the lender or online payday loan companies are licensed by the state. The licenses should be visible in store or on the website, and if you can’t find them, ask to see them. If you are still unsure, you can check the license with your financial regulatory office or state attorney.