Payday lending, which provides consumers an advance on their paychecks, has boomed in the last 20 years. There are around 23,000 payday lenders in the United States. For comparison, there are only 13,438 McDonalds restaurants in the U.S..
However, recent regulations on payday lending hope to reduce these numbers. The Consumer Financial Protection Bureau (CFPB) estimates that these stipulations will begin to stabilize the payday loan industry. Loan volumes are expected to reduce by about 65%, and the number of storefronts to decrease by 71%-76%.
Online stores have seen a particularly sharp increase of usage. Every year, $9 billion is paid in payday loan fees. The CFPB hopes to see the amount of payday loan stores decrease dramatically, particularly in the current COVID climate. With the financial struggles that the coronavirus has brought about, around 3% of Americans say they’ve had to borrow cash using a payday loan, deposit advance, or pawn shop loan.
Are There Payday Loan Lenders in My State?
As of April 2023, thirty-seven states have specific statutes that allow for payday lending. These states are Alabama, Alaska, California, Colorado, Delaware, District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.
Which States Have the Most Payday Loan Stores?
One research into the statistics on payday lenders look at the numbers of payday storefronts in each state per capita. According to their data, the most payday lenders can be found in California (2,451), Tennessee (1,344), and Mississippi (1,100). The research also states that the highest concentrations of payday loan businesses per 100,000 people are in New Mexico (41.78), South Dakota (40.01), and Mississippi (38.67).
Which States Have the Fewest Payday Loan Stores?
Of all the states in which payday loans are legal, Rhode Island has the fewest payday loan stores, with only five lenders open in the entire state.
In Which States Are Payday Loans Illegal?
Payday loans are currently illegal in Arizona, Arkansas, Colorado, Connecticut, Georgia, Maryland, Massachusetts, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Dakota, Vermont, West Virginia and the District of Columbia. Other states have rate caps that limit the APR lenders can charge you.
How Many Payday Lenders Are There in Each State?
| STATE | Number of Payday Lenders |
Payday Lenders Per 100,000
|
| Alabama | 1,177 | 26.47 |
| Alaska | 22 | 3.51 |
| Arizona | 726 | 14.15 |
| Arkansas | 275 | 10.29 |
| California | 2,451 | 7.24 |
| Colorado | 577 | 13.41 |
| Connecticut | – | 0 |
| Delaware | 82 | 10.46 |
| Florida | 1,164 | 7.28 |
| Georgia | – | 0 |
| Hawaii | 26 | 2.15 |
| Idaho | 196 | 15.15 |
| Illinois | 727 | 5.85 |
| Indiana | 117 | 1.92 |
| Iowa | 412 | 14.08 |
| Kansas | 100 | 3.72 |
| Kentucky | 707 | 17.49 |
| Louisiana | 1,009 | 22.58 |
| Maine | 6 | 0.47 |
| Maryland | – | 0 |
| Massachusetts | – | 0 |
| Michigan | 650 | 6.54 |
| Minnesota | 55 | 1.12 |
| Mississippi | 1,100 | 38.67 |
| Missouri | 1,257 | 22.47 |
| Montana | 104 | 11.53 |
| Nebraska | 57 | 3.33 |
| Nevada | 256 | 12.81 |
| New Hampshire | 77 | 6.23 |
| New Jersey | – | 0 |
| New Mexico | 760 | 41.78 |
| New York | – | 0 |
| North Carolina | – | 0 |
| North Dakota | 76 | 11.83 |
| Ohio | 1,374 | 12.1 |
| Oklahoma | 397 | 11.51 |
| Oregon | 453 | 13.24 |
| Pennsylvania | 400 | 3.26 |
| Rhode Island | 5 | 0.48 |
| South Carolina | 902 | 22.48 |
| South Dakota | 302 | 40.01 |
| Tennessee | 1,344 | 23.62 |
| Texas | 1,675 | 8.03 |
| Utah | 427 | 19.12 |
| Vermont | – | 0 |
| Virginia | 743 | 10.5 |
| Washington | 713 | 12.1 |
| West Virginia | – | 0 |
| Wisconsin | 439 | 8.18 |
| Wyoming | 77 | 15.59 |
What Types of Payday Loan Regulations Do States Have?
- Interest rate caps: Some states set maximum interest rates that lenders can charge on payday loans. These caps can be fixed or variable. For example, the state of New York caps APR on payday loans at 36%.
- Loan amount limits: Some states limit the amount that a borrower can take out in a payday loan. For example, the state of California caps payday loans to $300 currently.
- Loan term restrictions: Some states limit the length of time that a payday loan can be outstanding, typically between 2-3 weeks. Additionally, some states require lenders to offer extended payment plans to borrowers who are unable to repay their loans on time.
- Cooling-off periods: Some states require a cooling-off period between payday loans, during which a borrower cannot take out another loan. This is designed to prevent borrowers from becoming trapped in a cycle of debt.
- Database requirements: Some states require lenders to report loan information to a centralized database to prevent borrowers from taking out multiple loans at once.
- Borrower protections: Some states require lenders to provide certain disclosures to borrowers, such as the total cost of the loan and the APR. Some states also prohibit lenders from engaging in certain practices, such as rolling over loans or harassing borrowers for payment.
Last Updated on May 30, 2024 by Dana Leigh, Product Manager and Researcher