Pennsylvania Payday Loan Law and Legislation

Pennsylvania Payday Loan Regulations
Legal Status
Prohibited
Interest Rate (APR)
6% APR small loan cap

Payday lending is prohibited in Pennsylvania.

Pennsylvania banned payday lending in 1998 when 6% APR cap, and the situation has remained the same for years. There were attempts to change the law to the benefit of the industry, however, to no avail.

Pennsylvania Payday Lending Statutes

In the state of Pennsylvania, payday lending is considered illegal according to the Check Cashing Licensing Act of 1998, 505(a).

“Section 505.Restrictions on business of licensee.

(a)Advancement of moneys.–No licensee shall at any time cash or advance any money on a postdated check. No check-casher licensee shall engage in the business of transmitting money or receiving money for transmission, unless licensed under the act of September 2, 1965 (P.L.490, No.249), referred to as the Money Transmission Business Licensing Law.”

There is also the Consumer Discount Company Act 7 Pa. Cons. Stat. Ann. 6201 et seq.

Pennsylvania’s Loan Interest and Protection Law (LIPL) prohibits lenders without the CDCA license to charge an interest rate in excess of 6% per annum on a loan amount less than $50,000.

The Pennsylvania Supreme Court set a rule in 2008 that all lenders (in-state and out-of-state ones) willing to give loans to Pennsylvania borrowers must abide by the state laws. Online lenders were to be “licensed under the CDCA by February 1, 2009, or cease lending to Pennsylvania residents.”

Rates, fees and other charges in Pennsylvania

  • In Pennsylvania, any lending businesses offering either short-term cash advances or any loans are forbidden to charge more than 6% per annum as APR.
  • Small Loan Rate Cap also applies. All the lenders wishing to operate in the state should adhere to $9.50 per $100 per year interest plus $1.50 service charge for $50 per year when the contract is repayable within forty-eight (48) months from the date of making.

Consumer Information

More information about payday loan laws and regulations in Pennsylvania can be found on the official website of the Pennsylvania Department of Banking.

The History of Payday Loans in Pennsylvania

  • 1998 – Pennsylvania made payday lending illegal according to the Check Cashing Licensing Act of 1998, 505(a).
  • 2018 – An attempt to pass a bill (HB 2429) that would allow payday lenders to return as “loan-brokers” and get a Pennsylvania credit-repair organization license. The bill would create a loophole where fees charged would not be considered interest. Predatory lending would definitely come back. Luckily, the bill died in Committee.
  • Present days – As of 2019, by law payday loans remain prohibited in the state of Pennsylvania.

(As of May 2019)

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