Payday Loan Laws by State (2026)
No federal law caps what a payday lender can charge — each state decides for itself. Roughly two-fifths of states have capped or banned the product outright, most of the rest allow it with real strings attached, and a handful leave it almost unregulated. The full state-by-state breakdown.
Payday lending law in the United States is not one law. It’s fifty-one of them, each written, amended, and occasionally repealed by a different state legislature or ballot initiative, with the result that the exact same loan — a few hundred dollars, due back on your next payday — is a routine storefront product in one state and functionally nonexistent one state line over. There is no federal interest-rate cap on consumer loans. The one federal rule that does cap the cost of a payday loan applies to a single group of borrowers: under the Military Lending Act, active-duty service members and their dependents can’t legally be charged more than a 36% Military Annual Percentage Rate on payday, title, and similar short-term loans, no matter which state they’re borrowing in. Everyone else is governed entirely by the state they live in, which is why “is this legal” is a question with fifty-one different, genuinely different, answers.
That patchwork is the whole story of this guide. Below is a full state-by-state classification into three groups: states where payday lending is effectively prohibited (banned outright, or rate-capped so low the product doesn’t work commercially), states that permit it but with meaningful restrictions attached, and states that permit it with comparatively little restriction. This is a classification guide, not a fee table — for the maximum loan amount, exact fee schedule, or rollover rule in your specific state, check with your state regulator or a page dedicated to that state, since those figures change more often and in more detail than a 50-state overview can responsibly track.
The 36% line
A lot of the table below turns on one number: 36% APR. It shows up so often because it’s become the de facto industry kill-switch. A traditional payday loan works on a fee, not a conventional interest rate — commonly somewhere in the region of $15–$20 per $100 borrowed for two weeks, which annualizes to somewhere around 400% APR. Squeeze that down to a 36% ceiling, all fees included, and the arithmetic that makes a two-week storefront loan profitable simply stops working. That’s precisely why 36% became the number reform campaigns, ballot initiatives, and the Military Lending Act itself converged on: not an arbitrary “reasonable” rate, but the specific point at which the traditional payday-loan business model can’t survive. States that have adopted an all-in 36% cap in the last fifteen years or so — Montana (2010), Colorado (2018), Nebraska (2020), New Mexico and Hawaii (2017 and 2021), Illinois (2021), and Minnesota (2024) among them — didn’t outlaw payday loans by name. They didn’t have to. The cap did it for them, and national chains largely left those states within months of each cap taking effect.
It isn’t a perfectly clean rule, though, and two states show why. Oregon caps interest at 36% but allows a separate origination fee on top, which pushes the real effective APR on a typical short loan back up to somewhere in the 150% range — high enough that a shrunken payday market still exists there, just with far fewer licensed lenders than a neighboring unregulated state. Maine’s small-loan cap sits even lower, around 30% APR, and in practice only a handful of licensed lenders operate in the state at all. Both are genuinely borderline: legal in name, closer to prohibited in effect. Read the “restricted” notes in the table below rather than the bare status label if a state looks odd to you.
The three-way split
| State | Status | Note |
|---|---|---|
| Alabama | Permitted, restricted | Rollovers barred; state loan database |
| Alaska | Permitted | No meaningful rate cap |
| Arizona | Effectively prohibited | Payday-lending law sunset in 2010; general small-loan cap applies |
| Arkansas | Effectively prohibited | State constitutional usury cap |
| California | Permitted, restricted | Fees capped; rollovers barred; single-payment loans capped around $300 |
| Colorado | Effectively prohibited | 36% APR cap, voter-approved 2018 |
| Connecticut | Effectively prohibited | Wage-assignment ban blocks the payday structure |
| Delaware | Permitted | Annual loan-count limit; fees largely uncapped |
| District of Columbia | Effectively prohibited | Repealed payday-lending authorization in 2007 |
| Florida | Permitted, restricted | Fees capped; 24-hour cooling-off period; real-time loan database |
| Georgia | Effectively prohibited | Payday loans under $3,000 banned by statute; criminal usury applies |
| Hawaii | Effectively prohibited | 2021 reform capped small loans at 36% |
| Idaho | Permitted | No rate cap; a 36% cap bill has been introduced but not passed — worth watching |
| Illinois | Effectively prohibited | 2021 law caps all consumer loans, payday included, at 36% all-in APR |
| Indiana | Permitted, restricted | Tiered fee caps; cooling-off after consecutive loans; database |
| Iowa | Permitted, restricted | Rollovers limited; loan database |
| Kansas | Permitted, restricted | Loan-count and rollover limits; no simultaneous loans |
| Kentucky | Permitted | Rollovers barred, but no overall rate cap |
| Louisiana | Permitted | No rate cap; one of the higher-cost markets |
| Maine | Permitted, restricted† | ~30% APR cap on small loans; very few licensed lenders remain |
| Maryland | Effectively prohibited | Criminal usury cap bars payday-style lending |
| Massachusetts | Effectively prohibited | Small-loan rate cap, roughly 23% |
| Michigan | Permitted, restricted | Fee schedule capped; loan database; per-borrower limits |
| Minnesota | Effectively prohibited‡ | 36% all-in APR cap effective January 2024 — recently changed |
| Mississippi | Permitted | No rate cap |
| Missouri | Permitted | No rate cap; consistently among the highest average APRs nationally |
| Montana | Effectively prohibited | 36% APR cap, voter-approved 2010 |
| Nebraska | Effectively prohibited | 36% APR cap, voter-approved 2020 |
| Nevada | Permitted, restricted | Loan size tied to borrower income; extended repayment plan required on default |
| New Hampshire | Effectively prohibited | 36% APR cap since 2009 |
| New Jersey | Effectively prohibited | Criminal usury cap bars payday-style lending |
| New Mexico | Effectively prohibited | 36% cap on small installment loans, adopted 2017 |
| New York | Effectively prohibited | Criminal usury cap, 25% |
| North Carolina | Effectively prohibited | Let its payday-lending law sunset in 2001; actively enforced since |
| North Dakota | Permitted, restricted | Rollover limits; loan-size cap |
| Ohio | Permitted, restricted | 2018 reform capped costs and set a 91-day minimum term |
| Oklahoma | Permitted, restricted | Rollovers barred; cooling-off after repeated loans |
| Oregon | Permitted, restricted† | 36% interest cap plus a separate origination fee — effective APR runs well above 36% |
| Pennsylvania | Effectively prohibited | Small-loan rate cap, roughly 24% |
| Rhode Island | Permitted | No rate cap |
| South Carolina | Permitted, restricted | One-loan-at-a-time database |
| South Dakota | Effectively prohibited | 36% APR cap, voter-approved 2016 |
| Tennessee | Permitted | No rate cap |
| Texas | Permitted | Storefront lenders route around the state’s own usury caps via a broker (credit services organization) structure — one of the least-restricted markets in the country |
| Utah | Permitted | No rate cap |
| Vermont | Effectively prohibited | General usury cap, roughly 18% |
| Virginia | Effectively prohibited‡ | 2021 Fairness in Lending Act capped short-term loans at 36% all-in, ending single-payment payday loans |
| Washington | Permitted, restricted | Annual loan-count cap; mandatory installment repayment option |
| West Virginia | Effectively prohibited | No statute authorising deferred-presentment (payday) loans |
| Wisconsin | Permitted | No rate cap |
| Wyoming | Permitted | No rate cap |
† Oregon and Maine are borderline cases — legally “permitted,” but their rate caps sit close enough to the 36% line that few lenders actually operate there. Treat them as closer to the prohibited column in practice than the label alone suggests. ‡ Minnesota’s cap took effect in January 2024 and Virginia’s in 2021 — both are recent enough, relative to the rest of this table, that they’re worth double-checking against a current source before you rely on them.
Laws change, and this table can go stale in either direction — verify your state’s current rule with your state’s financial or banking regulator before acting on it. Last reviewed: July 2026.
What “prohibited” actually means on the ground
A state landing in the “effectively prohibited” column doesn’t mean payday lending is impossible to find there — it means the licensed storefront version is gone. Online and tribal lenders routinely advertise into states where payday lending is capped or banned, sometimes claiming an exemption from state law because they operate from a Native American reservation or, less plausibly, from offshore. Some of these operations are legitimate tribal lenders operating within a genuine regulatory framework; a significant number are not, and simply use the tribal-affiliation claim to dodge a state’s rate cap altogether while lending directly to that state’s residents. If you’re in a state where payday lending is prohibited and you’re being offered one anyway, that offer deserves more scrutiny, not less — a lender unwilling to be licensed in your state has also opted out of your state’s protections.
The protections that exist in permitted states
Where payday lending is legal, the “restricted” column in the table above generally comes down to a few recurring tools: cooling-off periods that force a gap before you can take out another loan, rollover bans or limits that stop a single loan from being endlessly re-extended into an ever-larger balance, statewide databases that stop you (or a lender) from stacking multiple simultaneous loans, and extended payment plans (EPPs) that let a struggling borrower spread a loan out over several installments instead of losing it to default. If you’re in a state that offers an EPP and you’re behind, ask about it before you assume a rollover is your only option — our guide to payday loan extended payment plans covers how they work and how to ask for one.
Before you borrow: confirm the lender is actually licensed
Whatever state you’re in, the single most useful thing you can check before taking out a payday loan is whether the lender is licensed to operate there. Your state’s banking department, department of financial institutions, or department of financial regulation — the name varies by state — maintains a lookup or licensee list, and a legitimate lender will be on it. An unlicensed lender, domestic or offshore, isn’t bound by your state’s fee caps, rollover limits, or cooling-off rules, because it never agreed to follow them in the first place. That single check catches most of the offers worth avoiding before you’ve handed over a bank account number or a post-dated authorization.
This is general information, not legal advice. State payday-lending law includes exceptions, sunset provisions, and court interpretations this guide can’t fully capture, and legislatures amend these rules most years. Confirm the current rule in your state — and, if real money or a contract is on the line, talk to your state regulator or a consumer attorney — before you rely on anything above.
Frequently Asked Questions
Are payday loans illegal in my state?
It depends entirely on where you live — there's no national answer. Roughly 20 states plus DC have capped small-loan interest so low, usually around 36% APR, that storefront payday lending isn't commercially viable, so it has effectively disappeared even where no law uses the word 'ban'. Most other states allow it but attach real restrictions — fee caps, rollover bans, cooling-off periods. A smaller group leaves it largely unregulated. Check the table in this guide, then confirm with your state's banking or financial regulator, since local rules change more often than national coverage catches up.
Why do some states that technically allow payday loans barely have any lenders?
Because 'legal' and 'profitable' aren't the same thing. A handful of states — Oregon and Maine among them — allow payday lending in name but cap the cost so close to the 36% line that many national chains won't operate there, leaving only a small number of licensed lenders. It's a useful reminder that a state's formal legal status doesn't always predict what you'll actually find on the ground; the rate cap does more work than the label.
Can I just get a payday loan online from a state where it's legal, even though my own state bans it?
You can try, but it's risky and often unenforceable in your favor. Legitimate licensed lenders generally require you to borrow under the laws of the state where you live, not the lender's state, and won't lend into a state where they're not licensed. Offers that ignore your state's ban usually come from unlicensed online or tribal lenders claiming an exemption from state law — a legally contested position that leaves you with little recourse if something goes wrong, since a company outside your state's jurisdiction is far harder to hold to your state's consumer protections.
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