Iowa Payday Loan Law and Legislation
>$10 on subsequent $100
Payday lending is legal in Iowa.
Iowa has a $500 limit on payday loans offered in the state. The maximum loan term is 31 days. The finance charges should not exceed $15 for a loan up to $100 plus not more than $10 on subsequent $100. Real APR is 337%*. Roll-overs are not allowed.
Payday lending in Iowa has had pretty lenient terms of operation. The industry has been regulated by the same laws for years and there don’t seem to be any changes to come in the nearest future.
Iowa Payday Lending Statutes
The operation of payday lending businesses is regulated by the state law – Iowa Code Ann. § 533D.1 et seq. or Delayed Deposit Services Licensing Act.
All lenders willing to operate in the state must comply with the existing regulations.
Also, there are definite regulations on the following account: a borrower should get a detailed contract written both in English and Spanish with all the containing information about payday loan transactions, fees and terms of repayment and so on. The contract should be written in layman’s terms and should contain the contact information of a lender as well as a toll-free number to contact in case of any problems and questions. Only if all the above-mentioned terms are complied with, a payday lending operation is considered legal. A borrower is also obliged to provide the contact information in full to a lender.
Loan Amount in Iowa
- According to the laws of Iowa, a borrower is not allowed to get more than a $500 loan.
- No more than 2 outstanding loans at a time are allowed.
Rates, Fees and Other Charges in Iowa
- A lender is not allowed to charge more than $15 for a loan of $0-$100 in terms of finance charges and fees.
- It is also allowed to charge $10 more on every $100 borrowed thereafter.
- The finance charge equals $16.67 for every $100 borrowed for 2 weeks.
According to Iowa Code Ann. § 533D.1 et seq. regarding Delayed Deposit Services, licensed lenders are required to give to the check writer, at the time of the loan transaction an annual percentage rate as computed in keeping with the federal Truth in Lending Act.
The Maximum Term for a Payday Loan in Iowa
- The maximum period for a loan when it should be repaid in 31 days.
- Rollovers or extensions are not allowed and it is required that a borrower should make a full repayment in time.
From July 2020, lenders are not required to check a borrower’s ability to repay a loan.
Be careful, evaluate your financial situation, don’t get into a debt trap.
The rule was changed by the CFPB.
- A lender is allowed to charge not more than $15 as a non-sufficient funds fee as well as for a returned check.
- At the present moment, the state law of Iowa has no definite regulation concerning criminal action against default payments. One thing is prohibited – a lender is not allowed to threaten a borrower with criminal prosecution in any way.
More information about payday loans in Iowa can be found on the official website of Iowa Division of Banking.
You may file a complaint with the Division of banking in case of any fraudulent actions on the part of a lender.
Regulator: Complaints & Information
Iowa Division of Banking
Address: 200 E Grand Ave #300, Des Moines, IA 50309
File a Complaint: https://www.idob.state.ia.us/bank/docs/comscomp.aspx
Number of Iowa Consumers Complaints by Topics
According to CFPB Consumer Complaint Database
- Fraud and threat ( 47 )
- Charges from account ( 35 )
- Not exiting debt ( 25 )
- Lender is not available ( 10 )
- Credit rating ( 10 )
- Loan to return ( 7 )
- Not requested loan ( 7 )
- Loan not received ( 4 )
The Quantity of Top Iowa Stores by Cities
The History of Payday Loans in Iowa
- Since 1998 – For years Iowa has been quite lenient when it came to payday loans. Payday lenders could charge any maximum fee in 1998, 2001, and 2004. Also, an effective maximum APR on 14-day 100$ loan in Iowa increased from 391% in 1998 to 435% in 2004. According to the Pew Charitable Trusts, it was one of 27 “permissive” states in 2012 that allowed payday lending with minimal regulations.
- 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 Iowa is now allowed to offer loans to the military at the excess of 36% APR.
- 2015 – There were 175 payday loan stores in Iowa, according to the state Division of Banking.
- 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 – Recently, Iowa Senator Joe Bolkcom has written an article (published in the Globe Gazette) where he suggested to limit payday loan interest rates to 36% APR. However, there hasn’t been any notice of this proposal turning into a bill proposal. Thus, no change so far.
[Updated As of February 2020]