Payday lending is legal in Idaho.
Idaho has a $1,000 limit on payday loan amount offered in the state. The terms of payday lending in Idaho are very relaxed, there is no limit to the finance rates and charges, and there are no limitations with regard to the length of the loan term either. 3 roll-overs are allowed. Criminal actions are prohibited.
Currently, Idaho has got one of the most relaxed approaches to payday lending in the country. Since the industry’s inception in the state in 2001, payday lenders could operate quite freely here and despite the number of legislative measures that passed in the recent years, and in 2014 in particular, the payday lending industry is still at large in Idaho. Regardless of the loan amount limit introduction, nothing has yet been done about the interest rates and fees (that can be as high as the lenders can choose, should borrowers only agree).
Surely, the past regulations were not ineffective as the number of payday lenders decreased by 34% as the result, yet, the industry still feels quite ok altogether.
Idaho Payday Lending Statutes
Payday lending is regulated by the Idaho Credit Code (Idaho Code Ann. § 28-46-401 et seq.) and by the Idaho Department of Finance. Borrowers are advised not to rush for such loans immediately and consider all the options as such expensive loans are fraught with more financial difficulties in many cases. Also, it is advised by the Federal Trade Commission (FTC) not to borrow excessive amounts in order not to get into bad indebtedness.
Also, according to the Truth in Lending Act (Regulation Z), all the borrowers should be made aware of all the aspects of a payday lending transaction, its peculiarities,
All the fees and charges should be indicated in the loan agreement in dollars. Also, it is a lender’s obligation to make clear to a borrower that payday loans are short-term and should be repaid in due time. Any renewals may be fraught with additional charges and this also should be made known to a customer prior to a loan transaction.
Loan Amount in Idaho
- It is prohibited to offer loans that are more than $1,000 in amount.
- A person is allowed to get as many
loans as he needs at a time; however, the total sum of them should not exceed $1,000 as well.
Rates, fees and other charges in Idaho
- A lender is free to charge any amount of fee and interest that may seem appropriate to them.
“(3) A licensee may charge a fee for each payday loan. Such fee shall be deemed fully earned as of the date of the transaction and shall not be deemed interest for any purpose of law. No other fee or charges may be charged or collected for the payday loan except as specifically set forth in this act.” ((Idaho Code, SECT28-46-412)
- Therefore, APR for a $100 loan given for a fortnight period can also be very different as well as very high.
Real APR for payday loans in Idaho can reach 652% (*According to the Center for Responsible Lending 2019: “Typical APR based on
According to the state laws in Idaho, payday lending companies are free to charge as much as they want on payday loans and that these aspects are agreed between the borrower and a lender. All this should be made known to a borrower prior to a loan transaction as well as all the facts about the transaction itself (amount, fees, interest, APR and so on), the latter should be indicated in the payday loan documents accordingly.
Maximum term for a payday in Idaho
- According to the Idaho laws, payday loans can be granted for any time period as there are no set limits.
- In the state of Idaho, laws prohibit to get another payday loan from the same lender in order to repay the previous debt.
- Lenders can be held liable for accepting any property or any other collateral in general for a payday loan.
- It is allowed to roll over a loan for not more than 3 times in a row. This is a limit after which a loan must be repaid. Lenders are not allowed to impose any other fee or charge apart from the agreed finance charge.
- All the criminal actions against borrowers are prohibited in the state of Idaho.
- Non-sufficient funds fee should not exceed $20 and 12% interest per annum on the unpaid amount (if disclosed).
In the state of Idaho, the Idaho Department of Finance is in charge of everything related to payday lending. All the questions and complaints should be addressed there.
The History of Payday Loans in Idaho
- 2001 – The payday lending industry operated in the state and was overviewed by the Idaho Department of Finance.
- July 2003 – The laws that specifically regulated payday lending industry in the state were adopted by the Idaho Legislature. Before that, payday licensed lenders operated in the state under the Idaho Credit Code.
- 2006 – The Military Lending Act effectively capped payday loans offered to the military at 36% APR. This federal law has no exceptions, thus, no lender in Idaho is now allowed to offer loans to the military in excess of 36% APR.
- July 1, 2014 – Idaho’s Payday Loan Act was amended (Senate Bill 1314) with the aim to add more protection to the customers in the state. The new set of rules limited the maximum loan amount to $1,000 (or 25% of a borrower’s gross monthly income). Also, the bill’s another provision limited the number of times a lender can attempt to cash a borrower’s check to 2. An extended payment plan now became a requirement and it can be requested by the borrower without any added fees. Now the borrowers are able to dividing the loan into 4 installments to repay the loan in the course of the following 12 months.
- June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (expected in November 2020).
- 2019 – Current situation with regard to payday loan regulations stays the same. Since 2014, when the Legislature passed a bill with the number of limitations, the number of registered payday lenders in Idaho slightly dropped (2016 – 174, 2018 – 154). However, the rates are still the same and they are still high. Also, the Idaho Department of Finance has been receiving an increased number of consumer complaints (5 times more since 2016) due to the fact that many customers don’t understand the loan terms. So, the problem is still here.
(As of April 2019)