Payday Lender Store Locations by State

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Payday loans are small cash short-term loans that are designed to cover immediate (and frequently emergency) expenses. They are censured a lot because of high-interest rates charged and the effect they have on borrowers in long-term perspective.

Still, at the moment, despite the controversial nature, they represent a feasible alternative for borrowers with bad credit and/or limited options to get cash in an emergency situation.

The Concept

Payday loans (also officially named in different state legislations as credit advances, deferred deposit services or transactions, short-term loans, and etc.) are:

  • small cash ($100 – $500 on average);
  • short-term loan products that are given for a period of 2 weeks on average (7 – 120 days depending on the state regulations);
  • and should be repaid in full (loan amount plus interest) at the end of the agreed period.

The Terms

Since the loans are short-term and unsecured (they do not presuppose any collateral), they also have very high-interest rates. The nature of the loan allows lenders to charge triple-digit APR rates that are much higher than usual rates for personal loans or credit cards. The average payday loan fee is $15 for every $100 borrowed, which equals to nearly 400% APR. The maximum loan rates are regulated at a state level, so, they vary depending on the location. Ideally, they should not exceed the allowed numbers; in reality, they almost always do (more about terms).

The Benefits

Unlike traditional personal loans offered by banks, payday loans are easier and faster to get (often within a business day), and they represent a very beneficial means to bridge the gap between paychecks. Unlike banks that are unwilling to grant a loan to a borrower with poor credit record, payday lenders offer much more lenient terms to their customers in this respect. Some states, however, require lenders to check the prospective borrowers in the state databases in order to exclude the possibility of excessive lending practices.

The Drawbacks

Apart from excessive APR rates, many lenders also offer the option to renew or roll-over the loan (in case a borrower is unable to repay in time). Renewal costs an additional fee, however, this is not what makes it bad; the longer the loan is rolled over, the larger is the interest over the term. This is, eventually, what leads to the situation when repayment becomes unaffordable and a borrower gets into the cycle of debt.

Legal Status of Payday Loans by State

Small cash lending has traditionally been regulated at the state level. State laws cover the issues of a loan amount, interest rates, fees and charges as well as some other issues. At the present moment, each state regulates the operation of all payday lenders on their territory, and their laws are not homogeneous. As a matter of fact, some states set more restrictive (and even prohibitive) measures with regard to the industry, others are more lenient.

According to the National Conference of State Legislatures as of 2019:

Currently, among the states that allow payday lending practices:

  • Ohio is the one with the most restrictive laws
  • Idaho is the most relaxed.

Ohio used to be the winner in the nomination for having the highest prices for payday loans until 2018. That was possible because payday lenders could register as mortgage lenders, thus, they could get around the law and charge triple-digit interest rates as much as they wanted. However, starting from April 27, 2019, they now have to comply with a 28% APR cap if they want to go on operating in the state. No more games.

Idaho, meanwhile, is not in a hurry to impose such restrictions on the industry. At the moment, the state sets no limitations either to the loan term or to the amount of the finance charges allowed. It doesn’t specify the maximum APR either. The only restriction is that the loan amount should not exceed $1,000, or 25% of an individual’s gross monthly income, with the possibility of having 3 rollovers. Thus, there is no surprise that payday lending is flourishing in Idaho.

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