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When it comes to payday loans, the amount you can borrow in a US state varies from $300 to $1,000. The specific amount depends on whether payday lending is allowed in that state, as there are 37 states where it is permitted.
A payday loan is a short-term solution where you receive the funds upfront and repay them within a timeframe of up to 30 days, 120 days, or 6 months. It’s important to note that this type of loan is exclusively for payday situations.
Typically, borrowers write a post-dated check for the loan amount plus fees, which the lender will cash on their next payday. These loans can be extremely helpful for individuals facing unexpected bills, car repairs, or medical expenses.
Additionally, there are certain regulations regarding payday loans. Each state has its own maximum charge limit, ranging from 36% to 652%. Moreover, the number of open loans allowed can vary from 1 to 2.
If you need to borrow more than $1,000, it would be considered an installment loan. This type of loan lasts longer than one month, and you have the flexibility to borrow amounts such as $3,000, $5,000, or even $35,000 if needed.
Find out How Much You Can Borrow From a Payday Loan in Each US State
|State||Maximum Loan Amount|
|District of Columbia||Prohibited|
|Nevada||25% of Gross Income|
|Wisconsin||35% of your monthly income|
*Please note that some rates are subject to change or may vary based on loan amounts.
Why Do Some US States Have Borrowing Limits?
Every US state operates in its own unique way. While some states have more lenient borrowing policies, others have chosen to completely ban payday loans. In states where borrowing is allowed, there is usually a cap of 36% APR on loans, which are often in the form of installment or personal loans.
It’s important to note that each state has its own regulations. While some states may allow higher borrowing amounts, they may restrict the number of payday loans you can have each month or at one time (e.g., 1 or 2).
In certain states, there is a higher tax on payday loan businesses. The revenue generated from these taxes is then reinvested into the local infrastructure and community. This approach varies based on the individual economies and priorities of each state.
It’s crucial to be aware that the maximum charges for payday loans differ from state to state.
Which US States Do Not Allow Payday Loans?
Payday loans are not legal in the following states: Arizona, Arkansas, District of Columbia, Georgia, Hawaii, North Carolina, Puerto Rico, and Utah. If you reside in one of these states, it is important to be aware of the laws regarding payday loans.
In these states, the maximum annual percentage rate (APR) that lenders can charge is limited to 36%, which is the national price cap. This is implemented to protect consumers from high costs associated with payday loans.
Each state has its own laws and regulations in place, with the aim of avoiding the offering of payday loans as a financial product. These laws are typically decided through a vote and the passing of a motion.
It is crucial to note that payday loans are designed for emergency use only and should not be used as a long-term solution for financial problems.
However, in states like Nevada and Texas, payday lending is allowed as it is seen as an important measure to combat poverty for individuals who live paycheck to paycheck. Additionally, it contributes significantly to the economy through increased spending and employment opportunities.
Do I Need to Live in the State I’m Applying for a Loan?
Yes, ideally you should be a resident and living in the US state that you are applying in. For example, if you live in Texas, it’s best to apply for a payday loan in Texas. This is because each state has its own specific requirements, such as the maximum borrowing amount, interest rates, and loan duration.
However, with Pachyy, we can still help you find a national product that you may be eligible for. We work with various banks, credit cards, apps, and credit unions that offer more universal products. This means you’re not limited to only the loan options available in your state.
Furthermore, some states may have limited loan amounts and durations compared to others. With Pachyy, you can explore the market and find the right loan product that suits your needs.