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Last Updated on April 18th, 2023 at 12:28 pm

The United States has the largest payday lending industry in the world, and payday loans are legal in 37 states. The biggest states for payday lending include California, Texas and Las Vegas, Nevada.

Payday lending is an industry that provides short-term loans to borrowers who may have difficulty obtaining credit through traditional means. While payday loans can be helpful in emergency situations, they often come with high interest rates and fees.

According to the Pew Charitable Trusts, 12 million Americans use payday loans each year, with an estimated $9 billion borrowed annually.

While payday loans are legal in 37 states, the regulations surrounding them vary widely. Some states have strict regulations on payday lending, such as limiting the amount of interest that lenders can charge or capping the number of loans that a borrower can take out in a certain period of time. Other states have fewer regulations, allowing lenders to charge higher interest rates and fees.

The payday market is thriving in the United States. Although regulations vary across the country, the United States is the world’s largest payday loan industry. There are approximately 23,000 payday lenders in the US, including storefronts and online lenders. It is estimated that each year, approximately 12 million American’s take out a payday loan.


In Which Other Countries Are Payday Loans Popular?

Payday loans are popular in several other countries besides the United States, including:

  • United Kingdom: Payday loans have been popular in the UK since the early 2000s. The industry grew rapidly until the government introduced stricter regulations in 2015, including a cap on interest rates and fees.
  • Canada: Payday loans are legal and popular in Canada, with an estimated two million Canadians using payday loans each year. The industry is regulated by each province and territory, with some jurisdictions imposing restrictions on interest rates and fees.
  • Australia: Payday loans have been legal in Australia since 2006, and the industry has grown rapidly in recent years. The government has introduced new regulations to protect consumers, including a cap on interest rates and fees.
  • New Zealand: Payday loans have been legal in New Zealand since 2008, and the industry has grown rapidly in recent years. The government has introduced new regulations to protect consumers, including a cap on interest rates and fees.
  • South Africa: Payday loans are legal and popular in South Africa, with an estimated three million South Africans using payday loans each year. The industry is regulated by the National Credit Regulator, which imposes restrictions on interest rates and fees.

The US Has The World’s Largest Payday Lending Industry


How Much Do Payday Loans Cost in the United States?

The cost of a payday loan will vary by lender. Each state also has a different cap on APR, meaning a loan of $100, for example, will cost a different maximum amount to take out in each state, as seen in the table below:


Cost per $100

Alabama $17.50
Alaska $20
Arizona N/A
Arkansas N/A
California $17.65
Colorado $7.50
Connecticut N/A
Delaware No Limit
Florida $16.11
Georgia N/A
Hawaii $17.65
Idaho N/A
Illinois $15.50
Indiana $15
Iowa $16.67
Kansas $15
Kentucky $17.65
Louisiana $30
Maine N/A
Maryland N/A
Massachusetts N/A
Michigan $15
Minnesota $15
Mississippi $20
Missouri $75
Montana $1.39
Nebraska $17.65
Nevada No Limit
New Hampshire $1.38
New Jersey N/A
New Mexico N/A
New York N/A
North Carolina N/A
North Dakota $20
Ohio $1.08
Oklahoma $15
Oregon $13 for a 31-day loan
Pennsylvania N/A
Rhode Island $10
South Carolina $15
South Dakota No Limit
Tennessee $17.65
Texas $11.87
Utah No Limit
Vermont N/A
Virginia $26.38
Washington $15
West Virginia N/A
Wisconsin $30
Wyoming No Limit
Washington DC N/A


How Are Payday Loans Regulated in the United States?

Payday lending is regulated by the Consumer Financial Protection Bureau. President Obama introduced the legislation after the 2008 financial crisis. However, local governments can choose whether to legalize lending in their state. There are 16 states and the District of Columbia which implement caps on interest rates at 36%. 

There are also a set of requirements to make a loan request. These often include:

  • You must be a U.S. resident
  • You must be over the age of 18
  • You need steady employment and a stable income
  • You earn a minimum of $800 per month
  • You have a valid and working mobile phone account
  •  You have a live checking account for your loan to be deposited into
  • You can afford to meet repayments


Where in the United States Are Payday Loans Legal?

According to the CFPB, 32 states allow these types of lending without significant restrictions.  In these states, it’s not uncommon to find APRs exceeding 400 per cent. 


There are 12 states — Arizona, Arkansas, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, New Mexico, Pennsylvania, Vermont, and West Virginia — in which payday loans are entirely illegal. 


How Can I Tell if a Payday Lender Is Legally Licensed in My State?

If you are considering taking out a payday loan, it is important to ensure that the lender is legally licensed in your state. Here are some steps you can take to determine if a payday lender is licensed in your state:

  • Check with your state’s financial regulatory agency: Each state has a financial regulatory agency that oversees the payday lending industry. Check the agency’s website to see if the lender you are considering is licensed to operate in your state. You can also contact the agency directly to confirm a lender’s license status.
  • Look for the lender’s license number: Many payday lenders display their license number on their website or in their storefront. If you see a license number, you can look it up on your state’s financial regulatory agency’s website to confirm its validity.
  • Check the Better Business Bureau: The Better Business Bureau (BBB) is a non-profit organization that provides information on businesses, including payday lenders. Check the lender’s BBB profile to see if they are accredited and if there have been any complaints filed against them.
  • Read the loan agreement carefully: By law, payday lenders must disclose certain information in the loan agreement, including their license number and the state in which they are licensed. Make sure to read the agreement carefully and look for this information.
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Katie Fisher

Katie Fisher studied English Literature before working in consumer finance as a research and content writer. She was one of the first members to join the Pheabs family and has developed a following for her writing, especially surrounding high cost loans and increasing transparency. You can follow her here on Linkedin.