Payday loans regulations by state.

Short-term loans are those which are given for the period less than a year. Payday loans refer to this kind as their repayment term is 14-30 days. They are under special control and regulations of the Government because of rather high APR. So cash advance can be legal, somehow restricted or prohibited in a state.

Most states of America allow short-term loans on a legal basis. 32 states authorize high-cost Payday cash advance. They are Alabama, Alaska, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.

Maine, Oregon and Colorado permit loans at lower rates (about 150% APR). Arkansas, New Hampshire, South Dakota, Arizona, North Carolina cap the rates to a very low amount (36%). The states of Connecticut, Maryland, Massachusetts, Pennsylvania, Vermont, West Virginia and the District of Columbia never authorized short-term cash advance. New York, Georgia, New Jersey prohibit it.1

What are your options to get money if your state prohibits Payday lending?

If you happen to get into the group who need money badly but are a resident of the state from the prohibited list, you still needn’t get into despair. There’s always a way out. Where can you take money?

  • If your permanent address is one state (where Payday loans are legal), but you temporarily live in another (which prohibits short-term lending) you are still able to apply in the state of your permanent residence.2
  • Take an Installment loan. It is also a small dollar cash advance, just repaid over a longer period of time. That’s why it’s not included into the group of short-term loans and is not regulated so strictly. It’s allowed in all the states, only in some with caps.
For a $500 closed-end installment loan, with all fees included:
  • In 19 states and the District of Columbia, the full APR is 16% to 36%,
  • 13 states allow interest and fees that can bring the full APR as high as 54%, 10 states allow fees that can potentially bring the full APR for a $500 loan up to between 61% and 116%,
  • 4 states place no cap on the interest rate except that it cannot be unconscionable–so one-sided that it shocks the conscience, and
  • 4 states have no rate cap or ban on unconscionability at all.3
  • Look for the bank offering short-term loans. In some states they are banned only for check cashers. And we work not only with online lenders, but with banks as well.
  • Apply to a credit union. Actually, banks, credit unions and check cashers may offer the same service, just with different rates and fees. Generally, banks charge higher interest rates and more fees than credit unions, while check cashing services may charge more in fees per transaction. However, according to the website The Consumerist, after all fees are tallied, check cashing fees are not much more than bank fees. For example, banks typically charge overdraft fees, monthly ATM fees and a fee for using other banks' ATMs; this may end up costing a consumer more, particularly consumers who make frequent ATM withdrawals.4
  • Ask your friends or relatives for help. Though it may seem inconvenient or even embarrassing sometimes, it’s also the way out. There always must be someone ready to help in a difficult financial situation, either officially with signing an agreement, or just on a trust basis, with or without an interest depending on how reliable your relationships are.

What consequences can it lead to if you take a Payday loan in the state which prohibits it?

In case you’ve managed somehow to borrow cash advance in any of the states that prohibit short-term lending you should be aware of the following things:

  1. If you happen to have any problems or complaints you won’t be able to get help or protection from the Government as you borrowed money illegally.
  2. If you found out about it after you already took the cash advance you have the right not to pay it back, you can close your bank account not to let the lender withdraw the money. But you must be careful not to get into debt collectors’ hands. So it’s better to learn as much information on the loan and the lender as possible beforehand.

That’s what our website is created for. We give you a unique opportunity to be constantly informed about Payday lending law and regulations in every state, about its amounts, rates and fees, and let you compare all the available direct lenders ready to give you cash and choose the most reliable one.