Where are Payday Loans Legal - 2023

Published: February 15, 2023
By the Pachyy Editorial Team
The Pachyy Editorial Team comprises a diverse and experienced team of writers, researchers and subject matter experts whose aim is to provide you with useful insights, guidance and commentary on all matters related to your personal finances.

Payday loans can be incredibly helpful in a financial emergency and be a useful way to get much needed cash before your next payday. However, some lenders have come under fire for their predatory practices against borrowers. As a result, some states have placed restrictions on payday lending (and in some cases consumer lending) with the aim of protecting borrowers.

The legality of payday / small loan lending can be uncertain in some states. Moreover, with state legislation constantly evolving, we decided to compile a comprehensive guide to the legality of payday lending across America in 2023.

Where are Payday loans Legal?

Payday loans are legal in 32 states across America. In Maine and Oregon, payday loan APR‘s are effectively capped at 217% and 154% respectively. List of states where payday loans are legal:

  • Alabama
  • Alaska
  • California
  • Delaware
  • Florida
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine (capped at 30% APR + fees: can result in 217% APR)
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nevada
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon (capped at 36% APR + fees: can result in 154% APR)
  • Rhode Island
  • South Carolina
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • Washington
  • Wisconsin
  • Wyoming

Federal law also dictates that fees are capped at 36% APR for payday loans for all members of the military.

Where are Payday Loans Restricted?

In 5 states, payday loans are legal but lenders are subject to major restrictions around i) the APR that they can charge, ii) the amount that they can lend and iii) the term length of the loan:

  • Colorado (capped at 36% APR)
  • Montana (capped at 36% APR)
  • Nebraska (capped at 36% APR)
  • New Hampshire (capped at 36% APR)
  • South Dakota (capped at 36% APR)

Where are Payday Loans Illegal?

Payday loans are prohibited in 13 states. Moreover, these states have laws that limit the APR that can be charged on standard consumer and small loans:

  • Arizona (consumer loans capped at 36% APR)
  • Arkansas (consumer loans capped at 17% APR)
  • Connecticut (consumer loans capped at 12% APR)
  • Georgia (small loans capped at 10% APR)
  • Maryland (consumer loans capped at 33% APR)
  • Massachusetts (small loans are capped at 23% APR)
  • New Jersey (small loans capped at 30% APR)
  • New Mexico (small loans capped at 36% APR)
  • New York (consumer loans capped at 16% APR)
  • North Carolina (small loans are capped at 36% APR)
  • Pennsylvania (small loans are capped at 6% APR)
  • Vermont (small loans are capped at 18% APR)
  • West Virginia (small loans are capped at 31% APR)

Beware of Payday Lending Scams in Sates that have Prohibited Payday Loans

Unfortunately, there are still predatory lenders who find ways to work around legislation and offer illegal and unlicensed loans. If you come across advertisements for payday loans in states where they’re illegal, take extra caution when dealing with the lender. 

If you suspect that you may have fallen victim to a payday loan scam, you should contact your local police department. 

Start an Application with Pachyy

Our application is designed to be user friendly. It is normally completed within 5 minuets and we do not charge any fees!

Sit back and let us work our magic!

Once you have submitted your application, we will evaluate all of your options and find the lowest APR payday loans for you. You will be notified of potential loans almost instantly after you submit your application.

Receive your Cash

Subject to further checks, you will be sent a loan agreement by email for the loan of your choosing. Once you have signed this loan agreement, cash will be wired to your checking account.

Apply Now