Vermont Payday Loan Laws and Regulations

Though you must have heard that traditional Payday Loans are restricted in Vermont, you may find other options to get instant cash advance permitted by Vermont laws. Study the state's rules and regulations concerning short-term loans in Vermont. Find available alternatives.

Table of Contents:

Are Payday Loans legal in Vermont?

Why are Payday Loans illegal in Vermont?

Vermont Payday Loans Laws

Vermont Payday Loans online laws

Does Vermont law allow Payday Loans for bad credit borrowers?

Vermont Payday Loans news  - latest changes

Vermont Payday Loans historical background

Vermont Payday Loan alternatives

Are Payday Loans Legal in Vermont?

Short-term Payday Loans in Vermont are Illegal but with certain restrictions imposed by 8 V.S.A. § 2519(a)(13).

Excluding banks and credit unions, all lenders need a state license from The Department of Financial Regulation: 89 Main Street, Montpelier, VT 05620 – 3101, (802) 828-3307, before soliciting or making loans. Vermont limits annual interest rates (including fees) at 18.00%.
Payday loans (loans contingent on a postdated payment instrument) are explicitly banned.
Since May 18, 2012 Vermont Legislature enacted the strongest law in the nation on predatory lending, by applying consumer protection laws to money lenders and those who assist such lenders.

The Payday Lending legislation covers all the parts of the process concerning:

• Payday Loan amounts
• Payday Loan repayment terms
• Payday Loan online direct lenders
• Payday Loan stores near you
• Payday Loan interest rates and other fees
• Payday Loan collecting practices
• Payday Loan default penalties
• The number of outstanding Payday Loans as well as a cooling-off period in-between etc.

Read more: Payday Loans in Vermont

The main Payday Loan eligibility criteria which the residents of 18.00% must meet are:

• Vermont (US) residence
• Minimum regular income of $1,000 per month
• Valid checking or savings account with direct deposit
• Phone number and e-mail address

For other details  and information on Payday Loans in Vermont contact The Department of Financial Regulation: 89 Main Street, Montpelier, VT 05620 – 3101, (802) 828-3307.

Why are Payday Loans illegal in Vermont? 

The Government considers Payday Loans too expensive and often associated with lenders' predatory practices. That's why in Vermont Payday Loans have been prohibited since 2012 with the interest rates capped at 18.00%.

The largest known illegal lender doing business in Vermont (via the internet) loaned nearly $1,000,000 to 427 Vermonters in a three-year period, and collected almost $900,000 in interest and fees alone (without applying any of that to principal).
 The average loan was under $2,500 with an interest rate above 115% APR.

Still, there still exist some banks and online companies offering similar types of cash advance suitable to cover any unexpected emergencies.

Vermont Payday Loan laws 

Vermont residents who would like to apply for a Payday Loan online as well as in-store must meet the following eligibility criteria:

• Vermont (US) residence
• Minimum regular income of $1,000 per month
• Valid checking or savings account with direct deposit
• Phone number and e-mail address

Vermont requires any person or entity which is not a state or federally chartered bank or credit union to obtain a state lending license from the Department of Financial Regulation, before making or soliciting a loan in Vermont.

Vermont limits the rates of interest charged for money lending at 18.00%.

However, there are no limits on the purpose of loan usage. Any urgent expenses, unforeseen bills, car repair, home repair, etc. may seem a sound reason to apply for an online Payday Loan in Vermont.

If you haven't succeeded in finding the necessary cash advance, there are always other options to receive the necessary funds in Vermont: unsecured Installment Loans, bad credit Personal Loans, Title Loans, Check Cashing, Pawn Shops, etc.

Vermont Payday Loans online laws 

Cash advances (payday loans) from both storefront and online lenders are restricted by 18.00% APR usuary cap by 8 V.S.A. § 2519(a)(13). It also concerns online lenders which must operate in accordance with all relevant state and federal laws. Otherwise, they may be liable to The Department of Financial Regulation: 89 Main Street, Montpelier, VT 05620 – 3101, (802) 828-3307 for law violations. 

Vermont has a current population of approximately 630,000. It is likely that between 5,000 to 8,000 Vermont adults have obtained an internet loan.

The law obligates Vermont Payday Loan lenders to provide you with a written disclosure of all the rates and fees in the understandable language. You should read them carefully and if you agree acknowledge the notification by signing the contract.

Does Vermont law allow Payday Loans for bad credit borrowers? 

The average credit score in Vermont is 702, placing it in the fair range. But it doesn't mean that those who have a worse credit can't apply for the necessary cash advance in Vermont. 

• First of all, there're some companies in Vermont providing similar to Payday loan services to borrowers with both good and bad credit score.
• Secondly, you can always find a cosigner to increase your chances of being approved for a bad credit Payday Loan.
• Find out how to improve your credit score and do your best to do it fast. 
• Or consider taking out a bad credit Installment Loan, or bad credit Personal Loan.

Vermont Payday Loans news  - latest changes

In October 20, 2017 The CFPB passed a Payday Loan rule that was designed to make lenders ensure that borrowers can afford to repay their loans. Vermont already caps payday loans and other expensive high-interest cash advances. The rule will not affect Vermont’s laws but will help raise the floor of protections in other states where payday loans are offered. Since 2012, Vermont has been a leader in protecting consumers from harmful lending practices, including cracking down on illegal online lending and working with Google to ban advertising for payday lenders.

Vermont Payday Loans historical background 

Vermont Payday Loan alternatives 

A study shows that consumers would take the following actions if payday loans vanished:

• Cut back on expenses - 81%
• Delay paying some bills - 62%
• Sell/pawn personal possessions - 57%
• Borrow from family/friends - 57%
• Get a loan from bank/credit union - 44%
• Use a credit card - 37%
• Borrow from employer - 17%

If you're looking for instant cash advance in Vermont but not a Payday Loan, consider other alternative ways to get the necessary funds:

• Apply for a Vermont Installment Loan - $1000 - $5000 cash advance repaid over several months or years in equal installments.
• Take out a Car Title Loan if you own a vehicle to use as collateral.
• Sell some of your valuable stuff online or at a pawn-shop.
• Apply for Vermont Tribal loans. Tribal lenders can avoid the state's caps and limits as they operate outside the state regulations. 
• Consider borrowing from a bank or credit union. U.S. Bank, the fifth-largest bank nationally, is lending up to $1,000 to cash-strapped consumers through its Simple Loan program.
• Find a licensed commercial money lender. Vermont’s licensed lenders may provide unsecured loans that are less expensive than those from most payday lenders. Contact Vermont DFR or visit DFR’s list of licensed lenders.
• Review your tax withholdings. If you have been receiving a large tax refund each year, you may want to reduce the amount withheld from your check. It is better to have money available when you need it, rather than pay interest on loans until the refund comes in.
• Consider a licensed, not-for-profit credit counseling agency. Debt adjustors, or credit counseling agencies, can help reduce fees and interest rates, arrange to waive charges, and stop harassing phone calls from creditors.
• Qualify for one of Federal or Vermont government assistance programs: Low Income Energy Assistance Program (LIEAP), Vermont Health Care Cost Containment System (AHCCCS), Supplemental Nutrition Assistance Program (SNAP), The Emergency Food Assistance Program (TEFAP), Commodity Senior Food Program (CSFP), Congregate and Home Delivered Meals, Cash Assistance, Child Care Assistance.