State-by-State Payday Loan Limits and Regulations 2024

Payday loans are short-term loans for small amounts of money. They’re usually taken out by people who need fast cash to cover emergency expenses—like rent, utility bills, car repairs, or medical costs—when they don’t have savings or access to a credit card.

These loans are easy to get but very expensive. The interest rates and fees are much higher than with regular loans from a bank or credit union. Because of this, payday loans are strictly regulated in the United States. But there is no single national law that controls them. Each state creates its laws, sets its limits, and decides whether payday lenders can operate at all.

In 2024, the legal rules for payday loans still vary widely from state to state. Some states permit payday lending with specific limitations. Some set caps on interest rates. Others ban it entirely.

What Are Payday Loans and How Do They Work

A payday loan is a small, short-term loan that’s usually due in full when you get your next paycheck, usually in two to four weeks. These loans are unsecured, which means you don’t need to put down collateral, like a car or home. Lenders approve payday loans based mostly on proof of income and a checking account.

To apply, you usually need to:

• Be at least 18 years old
• Have a steady source of income (like a job or benefits)
• Have an active checking account
• Show a valid photo ID

You can apply in person at a storefront or online. Lenders often advertise fast approval, with money deposited in your account the same day or the next.

How Repayment Works

When you take out a payday loan, you agree to repay the full amount of the loan plus a fee. The lender either takes a post-dated check from you or gets permission to withdraw the payment from your bank account on the due date.

For example, if you borrow $300 and the fee is $45, you will owe $345 in about two weeks. That fee may not seem high at first glance, but it adds up to an Annual Percentage Rate (APR) of over 390%, which is extremely high compared to traditional loans or credit cards.

The Debt Cycle Risk

If you can’t repay the loan on time, some lenders may offer a rollover, which means you pay only the fee and extend the loan for another term. But every time you roll over the loan, the fees increase, and it becomes harder to get out of debt. Many borrowers end up taking out multiple payday loans just to pay back the first one.

This pattern—borrowing, repaying fees, and borrowing again—is known as the payday loan cycle, and it’s one of the main reasons why these loans are so heavily regulated in many states.

Federal Oversight vs State Regulation

State lending regulations may vary from state to state, but several important federal laws also apply nationwide.

Federal Protections

Two key federal laws you should know about are:

• Truth in Lending Act (TILA): This law requires all payday lenders to tell you the full cost of the loan before you agree to it. They must show the APR, the total finance charge, the amount you’ll repay, and the payment due date. This helps you compare different offers and understand exactly how much you’ll pay.
• Military Lending Act (MLA): This law protects active-duty military members and their families. Under the MLA, payday lenders can’t charge them more than 36% APR. The law also bans automatic access to military members’ bank accounts and other unfair loan terms.

State Regulation

Other than those federal rules, all other payday loan laws are made at the state level. This includes:

• Whether payday lending is legal or not
• How much can you borrow
• What fees and interest rates can be charged
• How long do you have to repay
• Whether rollovers are allowed
• What lenders must do to get licensed

That’s why payday loan rules are different depending on where you live.

States That Ban Payday Loans

Some states have completely banned payday loans. This means lenders are not allowed to offer them, either in person or online. These states believe that payday loans are too risky for consumers due to their high costs and the debt traps they can create.

As of 2024, payday loans are not allowed in:

• Connecticut
• Maryland
• Massachusetts
• New Jersey
• New York
• North Carolina
• Pennsylvania
• Vermont
• West Virginia

In these states, the law usually caps the APR at 36% or even lower. Payday lenders can’t afford to operate under those conditions, so they stay out.

For example, New York’s law says that any loan with an APR above 25% is considered criminal usury, which is a criminal offense. If a payday lender tries to offer loans in these states, state regulators can shut them down and even file lawsuits.

This also applies to online lenders. Just because a company is based in another state or country doesn’t mean they can legally lend to you. If you live in a state that bans payday loans, the lender must follow your state’s rules.

States With Strict Interest Rate Caps

Some states permit payday lending, but only if the fees and interest rates are kept at a low level. The most common limit is 36% APR. That’s the same cap used in the federal Military Lending Act. It’s considered a fair upper limit for short-term loans.

Examples of states with strict APR caps:

• Colorado: Lenders can’t charge more than 36% APR. Loans must last at least six months and be repaid in installments, not as a lump sum.
• South Dakota: Voters passed a law in 2016 that limits APR to 36% for all consumer loans, including payday loans.
• Montana: APR is also capped at 36%. This was approved by voters in 2010.
• Nebraska: In 2020, a ballot measure capped all payday loans at 36% APR.
• Illinois: Passed the Predatory Loan Prevention Act in 2021, setting a 36% APR limit on all small loans.

These caps make payday loans much more affordable and reduce the chances of borrowers falling into a debt trap. Due to lower profit margins, many payday lenders have left these states, and safer lending options have emerged.

States With Moderate Loan Limits and Rules

Some states allow payday loans but apply clear rules on how much can be borrowed, what fees can be charged, and how many loans a person can have at one time. These rules are meant to keep payday lending available without making it dangerous for consumers.

Examples:

• Michigan: Borrowers can take out up to $600. Lenders charge 15% on the first $100, 14% on the next $100, and so on, with lower percentages as the loan amount increases.
• Washington: The maximum loan is $700 or 30% of your gross monthly income, whichever is less. You can only take out eight loans per year.
• Virginia: Payday loans go up to $2,500, with terms of 4 to 24 months. APR is capped at 36%, and lenders may charge a monthly fee based on your loan balance.
• Oregon: Requires a minimum loan term of 31 days. APR is limited to 36%, plus a one-time fee up to $30.

These states strike a balance: they allow access to short-term cash but control the terms so that borrowers aren’t overwhelmed by debt or excessive fees.

States That Allow High-Cost Payday Loans

Some states do not cap interest rates on payday loans, and lenders can charge extremely high fees. These states have weak or no-cost limits, which allow payday loans to remain expensive and risky.

Examples:

• Texas: There is no state limit on fees or APR. Lenders use a workaround called “Credit Access Businesses” to partner with third-party lenders and add their fees. APRs often exceed 600%. Some cities like Austin and Dallas have tried to regulate payday lending, but there’s no statewide rule.
• Nevada: No APR cap. Lenders are only required to register and disclose the loan costs. Payday loans in Nevada often come with APRs over 400%.
• Mississippi: Borrowers can take up to $500. The fee is $21.95 per $100 borrowed, which leads to APRs over 500% for a typical 14-day loan.
• Alabama: The fee is $17.50 per $100, with terms of 10 to 31 days. The APR often reaches 456%.
• Utah: There are no interest rate or fee caps. The only requirement is that lenders must register with the state and follow disclosure rules.

In these states, payday loans are easy to get but come with high financial risks. Many people end up paying far more in fees than the amount they originally borrowed.

States With No Specific Payday Loan Laws

A few states don’t have specific laws just for payday lending. Instead, lenders operate under general consumer lending laws. These rules may still protect borrowers in some ways, but they usually allow higher costs and fewer restrictions.

Examples:

• Idaho: Lenders can charge any interest rate. They must be licensed and must let borrowers cancel a loan by the end of the next business day without penalty.
• Delaware: There is no APR cap, but borrowers are limited to five payday loans per year.
• Wisconsin: No maximum interest rate. Lenders must disclose all loan terms and fees and follow rules against unfair collection practices.

Because of the lack of specific rules, payday loans in these states can still be expensive and carry the same risks seen in high-cost states.

Legal Cash Advance Amounts by State

States that allow payday loans set limits on how much money a borrower can get in a single loan. These limits are based on income or fixed dollar amounts to help prevent people from borrowing more than they can afford to repay.

Examples of state loan limits:

• California: $300
• Alaska: $500
• Florida: $500
• Illinois: $1,000 or 25% of monthly income
• Kansas: $500
• Louisiana: $350
• Washington: $700 or 30% of income
• Virginia: $2,500
• Texas: No limit

States without loan limits allow lenders to issue large payday loans, which can be riskier if borrowers are unable to repay them on time.

Loan Term Payday Loan Limits by State

The loan term refers to the duration over which you must repay the payday loan. Shorter terms mean faster repayment, but they also mean a higher chance of needing a new loan if you can’t pay in full. Longer terms give you more time and lower your risk of rollover.

Examples:

• California: Up to 31 days
• Colorado: Minimum of 180 days
• Florida: 7 to 31 days
• Oregon: Minimum of 31 days
• Virginia: 120 days to 24 months, depending on the loan

States that require longer terms often pair them with lower APRs to make repayment easier and reduce default rates.

Interest Rate and Fee Caps by State

Interest and fees are the most important parts of any payday loan. States that cap them give borrowers more protection from hidden or excessive charges.

Examples:

• California: 15% of the loan amount; no APR cap
• Colorado: 36% APR + monthly maintenance fee
• Florida: $10 per $100 borrowed; equivalent to about 304% APR
• Illinois: 36% APR on all loans
• Nevada: No cap; lenders must disclose fees

If a state doesn’t set limits, payday loans can become extremely expensive, even if the borrower repays on time.

Rollovers and Renewals: State-Specific Policies

A rollover is when you pay a fee to extend the loan because you can’t pay the full amount. This can be dangerous because it adds new fees each time and doesn’t reduce your original loan balance.

Examples:

• Arkansas: Rollovers are banned completely
• Florida: One rollover allowed, with a 24-hour break
• Texas: Unlimited rollovers allowed
• Washington: Rollovers banned
• Michigan: Only one loan at a time; rollovers limited

States that ban or limit rollovers are trying to break the debt cycle that payday loans often create.

Licensing and Lender Requirements

States that allow payday lending require lenders to get a license. Licensing helps the state track lender behavior, enforce rules, and protect consumers.

Licensing usually involves:

• Registering with the state’s financial department
• Paying annual license fees
• Posting the license number on websites and storefronts
• Undergoing regular audits
• Following customer disclosure and complaint procedures

Borrowers can check whether a lender is licensed by visiting their state regulator’s website.

Consumer Protections and Borrower Rights

State payday loan laws often include extra protections for consumers to prevent unfair treatment.

Examples:

• Cooling-off periods: A required break between loans to stop borrowers from taking loans back-to-back
• Loan limits: Rules that prevent you from having more than one payday loan at a time
• Clear disclosures: Laws that require lenders to explain the APR, fees, and repayment terms in writing
• Installment repayment: Larger loans must be paid back in equal parts over time rather than all at once

These rules help borrowers avoid confusion and make better financial decisions.

Enforcement of State Laws and Penalties for Violations

Every state that allows payday lending also has an agency responsible for enforcing the laws. These agencies make sure lenders are following the rules and respond to borrower complaints.

Examples:

• Texas: Office of Consumer Credit Commissioner (OCCC)
• California: Department of Financial Protection and Innovation (DFPI)
• Illinois: Department of Financial and Professional Regulation (IDFPR)

These agencies can fine lenders, shut down illegal operations, and take them to court for prosecution. Borrowers can contact them to report unfair or illegal practices.

How to Check Your State’s Current Payday Loan Rules

Payday loan laws change often, so it’s important to check official sources before borrowing.

Trusted places to check:

• Your state’s Department of Financial Institutions
• Your Attorney General’s office
• The Consumer Financial Protection Bureau (CFPB)
• The National Conference of State Legislatures (NCSL)

These websites offer up-to-date information, complaint tools, and license verification.

Resources for Borrowers Seeking Legal Help or Alternatives

If you’re facing payday loan debt or want to avoid using one, help is available.

Helpful options:

• NFCC (National Foundation for Credit Counseling): Offers debt advice and budgeting help
• Legal Aid: Provides free or low-cost legal help for loan disputes
• Credit Unions: Many offer low-interest Payday Alternative Loans (PALs)
• CDFIs (Community Development Financial Institutions): Offer fair loans in local communities
• State consumer hotlines: Help you file complaints and understand your rights

Exploring these options can provide you with safer and more affordable ways to manage short-term financial challenges.