Connecticut Payday Loan Law and Legislation
Payday lending is prohibited in Connecticut.
Connecticut law does not explicitly address payday loans. However, both Connecticut’s small loan law and check casher law, as well as usury law, put a 12% APR cap on all loans and serves as a limit to payday loans as well. Also, currently, despite all the claims of tribal lenders, all payday loans are illegal in Connecticut.
Connecticut Payday Lending Statutes
Connecticut has two laws that restrict payday lending: small loan law and check casher law (CGS §§ 36a-563, -565, and -581, Conn. Agencies Reg. § 36a-585-1).
Also, there is a usury cap in Connecticut that all lenders have to comply with if they want to operate in the state. (CGS §§ 37-4 and -9).
According to the state law, all lenders willing to operate in the state have to acquire the license with the Banking Department of Connecticut that allows issuing small consumer loans (up to $15,000) at a rate not exceeding 12% APR.
In order to get a license for lending business, a company should provide all the information and pay $250 application fee. Moreover, an individual lender or a company should have an amount of $10,000 for every branch of the company they plan to open. The state commissioner decides whether to give permission or not after a background check.
Such lending is a highly unprofitable business in Connecticut due to state laws. Also, as long as lending on any other terms is illegal there are no payday lending companies here as such.
The laws are aimed to protect the residents of the state of Connecticut form dishonest actions of the lenders and to prevent usury. With all these severe limitations, payday lenders find it difficult to work in the state.
Also, tribal lending is considered illegal in the state of Connecticut.
Rates, Fees and Other Charges in Connecticut
- There is a small loan cap of 12% APR.
- There is also a usury cap of 12% APR.
The interest rate also depends on the type of loan: an open-end loan or a
- Open-end loans can be offered at 19.8%.
- Closed-end loans can have varied interest rates with regard to the loan term:
- $17 per $100-$600 loan amount borrowed;
- If it is $100-$1,800, then, the
annualpercentage rate is reduced to $11. Add-on interest is also taken into consideration.
More information about payday loan laws and regulations in Connecticut can be found on the official website of the Connecticut Department of Banking.
Regulator: Complaints & Information
Connecticut Department of Banking
Address: 260 Constitution Plaza, Hartford, CT 06103
Phone: 860-240-8299 or 800-831-7225 (toll free)
File a Complaint: https://portal.ct.gov/DOB/Consumer/Consumer-Complaints/Banks
Number of Connecticut Consumers Complaints by Topics
According to CFPB Consumer Complaint Database
- Charges from account ( 26 )
- Fraud and threat ( 23 )
- Not exiting debt ( 13 )
- Not requested loan ( 8 )
- Loan to return ( 3 )
- Credit rating ( 3 )
- Loan not received ( 2 )
- Lender is not available ( 1 )
The History of Payday Loans in Connecticut
- In Connecticut payday loans have always been banned by default, as there is no law legalizing them (and there never was one).
- 2017 – Tribal lenders in Oklahoma brought up claims that the 12% APR cap violates their sovereign rights. However, the Legislature stated that payday loans in Connecticut are illegal despite the originator (online tribal lenders included).
[Updated As of February 2020]