Click on your state to learn if payday loans are legal or prohibited and the state law that applies.
In the United States, payday lending is subject to state regulation. Twenty-nine states have laws that permit payday lending with varying degrees of regulation.
These states include Alabama, Alaska, Colorado, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Minnesota, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.
Each state's laws may dictate the cost of a payday loan, often shown as the annual interest rate for a 14-day $100 loan. They also govern the maximum number of loans a consumer can have, renewal limitations, and the availability of extended repayment plans. Additionally, collection limits determine what lenders can charge if the loan is not repaid and whether lenders can pursue criminal action against borrowers who fail to repay.
Eighteen states and the District of Columbia have enacted measures to shield consumers from high-cost payday lending through the implementation of usury rate caps or outright prohibitions.
This list includes states like Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, New Mexico, Pennsylvania, Vermont, West Virginia and the District of Columbia, most of which have implemented rate caps at 36% APR.
Significant updates include Nebraska, which voted to cap payday loan rates at 36% following a 2020 ballot initiative; Hawaii, which, starting January 1, 2022, repealed traditional payday lending laws and instead implemented a system where companies can offer small-dollar loans up to $1,500 with repayment terms up to 12 months; Illinois, which also set a 36% rate cap in 2021; New Mexico, which introduced a similar cap in 2023; and Minnesota, set to implement a 36% rate cap at the beginning of 2024.
Additionally, states like Connecticut, West Virginia, and Georgia have directly banned high-cost payday lending through specific legislative actions, demonstrating a nationwide shift towards greater consumer protection in the small-dollar loan market.
