Can I Get a Payday Loan In Another State?

Yes, you can get a payday loan from a lender based in another state — but only if payday loans are legal where you live. Your home state's law controls the loan, not the lender's state, according to the Consumer Financial Protection Bureau (CFPB). What does that mean, exactly? In other words, an online lender has to follow your state's rate caps, license rules and loan limits, even if the company is headquartered across the country.

Key Takeaways

• Your state's law applies. The payday loan rules of the state where you live govern the loan, per CFPB guidance.

• Online lenders need a license in your state. A lender must hold a license in your home state to lend to you legally.

• Tribal lenders are different. Tribal payday lenders claim sovereign immunity, but courts have ruled they still must follow some state consumer laws when lending to residents of that state.

• Bans still count online. If your state bans payday lending, an out-of-state online lender cannot legally issue you a payday loan.

• Unlicensed loans may be void. Loans from unlicensed lenders are voidable in many states, meaning you may not owe the fees or interest.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

How Does an Out-of-State Payday Loan Work?

Out-of-state payday loans work similarly to in-state payday loans. Like all payday loans, the lender will provide a relatively small amount of cash upfront. When the borrower’s next paycheck arrives, the lender expects full repayment, along with a significant amount of interest. 

Since many payday lenders operate online, getting an out-of-state payday loan is often as simple as applying online. But, again, you'll only be able to obtain an out-of-state payday loan if the state you live in allows payday lenders to operate. 

How Does Living in a State Where Payday Loans Are Legal Affect This?

If you live in a state where payday loans are legal, that means you can also obtain payday loans from lenders in other states. However, the rules in your state will still apply to any payday loan you receive from an out-of-state lender. 

In many places, state regulations impose maximum loan amounts, interest rate caps and specific criteria for loan terms. Even if you apply for a loan from an out-of-state lender, the loan should follow the rules of your own state. 

How Does Living in a State Where Payday Loans Are Illegal Affect This?

If you live in a state where payday loans are illegal, you likely won't be able to get a payday loan from lenders in any state. Since your place of residence determines what lending rules are followed, out-of-state payday lenders generally can’t provide a loan if your state forbids it. 

Payday Loan Rules by State

Payday lending rules fall into three buckets, according to the National Conference of State Legislatures (NCSL) and the Consumer Federation of America (CFA).

States that permit payday lending with standard rules:

• Allowed with regulation: Alabama, Alaska, California, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Utah, Washington, Wisconsin and Wyoming.

States that restrict payday lending with rate caps or strict limits:

• Restricted lending: Colorado, Maine, New Hampshire, New Mexico, Oregon, South Dakota and Virginia cap the annual percentage rate (APR) at 36% or apply other tight limits, per the CFA.

States and territories that ban or do not authorize payday lending:

• Banned or no authorization: Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, Montana, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia and the District of Columbia.

Rules change. Check the NCSL payday lending statutes page for the current law in your state before you apply.

How To Check if an Out-of-State Payday Lender Is Legal in Your State

1. Find your state regulator. Search for your state's department of financial institutions, banking division or consumer credit commissioner. Every state lists the agency that licenses small-dollar lenders.

2. Use the state license lookup. Most state regulators publish a free license lookup tool. Enter the lender's legal name to confirm an active license to lend in your state.

3. Check the NMLS Consumer Access database. The Nationwide Multistate Licensing System (NMLS) lists licensed nonbank lenders and the states they are authorized to operate in.

4. Search the CFPB complaint database. Look up the lender on the CFPB Consumer Complaint Database to see past complaints and how the company responded.

If the lender doesn't show up in your state's license system, don't borrow from them.

Alternatives To Payday Loans

If you can’t access payday loans in your state, there are other ways to obtain funding quickly. A few include:

• Use Instacash®: Instacash isn't a loan and shouldn't be considered as such. MoneyLion lets you access interest free cash advances, up to $500 of your eligible pay before payday.

• Personal loan: Unsecured personal loans don't require collateral. These loans involve set repayment terms and a fixed monthly payment. 

• Buy now, pay later (BNPL): BNPL services allow you to break up the cost of a purchase into four or fewer interest-free installments, which could spread out expenses to alleviate pressure on your budget. 

• Credit card cash advance: Many credit cards allow for cash advances. If you pursue this option, make sure to review the fees and interest charges before moving forward. 

• Ask for help: If you have family or friends willing to provide a loan, consider leaning on that help. Generally, it’s a good idea to sign a written agreement with your generous friend or family member to confirm everyone understands the repayment expectations. 

• Find a side hustle: If possible, pick up extra work to increase your income. Even if you only boost your income temporarily, it could provide the funds you need. 

Payday loans often offer quick financial solutions. But the high interest rates and short repayment terms attached to payday loans make it easy to fall into a cycle of debt. If possible, seek out alternative ways to obtain the funds you need. 

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FAQs

Can you have payday loans in two states at the same time?

You can hold loans from lenders in different states at once, but only if both loans follow the laws of your home state. Several states — including Florida, Michigan and Virginia — also cap how many payday loans you can have open at one time and track them in a statewide database.

Can you apply for a loan in a different state?

Yes, you can usually apply for a loan in a different state. However, the lending rules in your state will apply regardless of where you take out the loan.

How much would a $1,000 payday loan cost?

The exact cost of a $1,000 payday loan varies based on your situation. But since payday loans tend to be expensive lending options, with APRs as high as 400%, expect to face hefty interest charges. 

How much does a payday loan cost?

Payday lenders typically charge $10 to $30 for every $100 you borrow, according to the CFPB. Here's how that math plays out. If you take a $1,000 payday loan at a $15 per $100 fee with a 14-day term, you pay $150 in fees and owe $1,150 on your next payday. That $150 fee on a two-week loan works out to about a 391% APR. Stretch the same fee across a full year and the cost climbs fast, which is why payday loans rank among the most expensive forms of credit.

Can an out-of-state payday lender sue you?

Yes. An out-of-state lender can sue you in your home state to collect a valid debt. If the lender was not licensed in your state, courts in states like New York and Pennsylvania have refused to enforce the loan contract.

Do tribal payday lenders have to follow state law?

Tribal lenders claim sovereign immunity, but federal courts — including the Second Circuit in Otoe-Missouria Tribe v. New York — have ruled that state regulators can enforce consumer protection laws against tribal lenders that lend to state residents over the internet.

What happens if you borrow from an unlicensed lender?

If you borrow from a lender that is not licensed in your state, the loan may be void or voidable under your state's lending statute. You may still owe the principal in some states, but fees and interest are often unenforceable. File a complaint with your state attorney general and the CFPB.

Payday Loan Terms To Know

• Payday loan: A small, short-term loan — usually $100 to $1,000 — repaid in full on your next payday, often within two to four weeks.

• Out-of-state payday loan: A payday loan issued by a lender headquartered or licensed in a state other than where you live.

• Online payday lender: A nonbank lender that takes applications and funds loans over the internet, and must hold a license in each state where it lends.

• Tribal lender: A lender owned by or affiliated with a federally recognized Native American tribe that may claim sovereign immunity from some state laws.

Sources:

• Can I Get a Payday Loan in Another State? Legal Limits. LegalClarity.

• What Is a Personal Installment Loan? CFPB.

• What Is a Buy Now, Pay Later (BNPL) Loan? CFPB.

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