Payday Loans in Nevada: Are They Legal and How Do They Work?

Payday loans enable you to access money from your next paycheck via a short-term loan. Nevada residents may use payday loans to meet short-term financial needs when other borrowing options aren't available. 

Getting same-day access to cash with payday loans can be risky, however. Understanding how Nevada payday loans work and the alternatives can help you decide if this is the right loan option for you.

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Are payday loans legal in Nevada?

Payday loans are legal in Nevada; traditional payday loans are referred to as "deferred deposit" loans under state law. Here's what the revised statutes say about payday lending in Nevada.

• APR: There is no state-specified cap on rates. 

• Fees: Lenders may charge a maximum of 2 insufficient (NSF) funds fees of $25 each; other fees must be "reasonable".

• Loan limits: The maximum limit per loan is 25% of gross monthly income.

• Loan terms: There is no minimum loan term; the maximum is 35 days.

• Renewal: Loans can be renewed for up to 90 days. 

• Additional loans: Borrowers are allowed one loan per lender. 

Compared to other states that allow payday lending, Nevada has far fewer restrictions. That could make it easier to get one of these loans, but it can also put you at risk of paying higher rates to get cash for short-term needs. 

How payday loans work in Nevada 

Nevada payday loans don't set strict limits on what you can borrow, other than the 25% cap on gross monthly income. For example, you could borrow $1,250 with a gross monthly pay of $5,000. You'd be expected to repay this amount within a maximum of 35 days, unless you get an extension from the lender. 

When you get a payday loan in Nevada, you agree to let the lender withdraw the money you owe from your bank account. You'll need to share your bank account number and routing number to set up the automatic withdrawal. If you don't have enough money to cover the amount due on the payment date, the lender can charge you a $25 insufficient funds fee. They can do this up to two times, under state law. Your bank could also charge overdraft fees if the payment is allowed to go through. 

State law lets you extend loan repayment up to 90 days if you're unable to pay by the scheduled due date. Your lender can charge a fee to renew your loan. The law in Nevada doesn't state a cap on how much a lender can charge you per $100. Interest rates aren't capped either. 

That could make payday loans in Nevada an expensive way to borrow. For example, say you get a $500 loan with a two-week repayment term. Your lender charges a $15 fee for every $100 borrowed. That equates to a 391% effective APR, according to the Federal Trade Commission (FTC). And that figure doesn't account for any additional costs should you decide to renew the loan.

The risks and dangers of payday loans

Payday loans can have negative consequences, both in the short and long-term. Being aware of these dangers can help you decide if this is a path you want to take when you need cash.

Short-term risks of using payday lending include:

• High rates. Since Nevada doesn't limit payday loan rates, you could pay significantly more in interest compared to other types of loans. 

• Fees. The law doesn't specify hard caps on fees either, other than insufficient fees. The  more fees a lender charges, the more the loan costs you.

• Debt trap. Payday loans can put you in a debt trap if you take out multiple loans with different lenders, or continually renew your loans. Renewing doesn't make a dent in the original balance, while multiple loans could put even more strain on your future paychecks. 

In the longer-term, payday loans can be damaging to your credit scores if you default. Default means you don't pay the lender what's owed. If a payday loan goes unpaid long enough, the lender could send it to collections. 

Having an unpaid collection account on your credit report can hurt your credit score and make it harder to qualify for other types of loans. In a worst-case scenario, you could be sued for payday loan debt. Judgments won't show up on your credit reports, but the lender could still try to garnish your wages or freeze your bank accounts. Either scenario could make what's likely a difficult financial situation even worse for you. 

How to avoid the payday loan trap

If you're experiencing a temporary financial hardship, a payday loan can look attractive. But you could be setting yourself up for trouble with these loans if you're stuck with a high interest rate or fees. 

Strengthening your financial foundation could help you avoid a scenario where you might feel the need for a payday loan. Here are a few tips to help you do that. 

• Create an emergency budget. When times are tight financially, a lean budget can be a lifesaver. Look at what you spend each month now and ask yourself what you could live without if you needed to cut back. Challenge yourself to live on your emergency budget for one month and stash what you don't spend in savings. If you're already on a tight budget, the next tip might be more helpful.

• Increase your income. Even a few extra dollars each month could make a difference in your financial situation. You could use the money to cover bills or build some savings. Side hustles, a part-time job and freelancing are a few ways to bring in the money you need. If you have a salaried job, negotiating a raise could also be an option if conditions in your company are right for that. 

• Start saving. A rainy day fund can help you get through smaller emergencies without having to take out a payday loan. If you've struggled to save, it's okay to aim low in the beginning. Saving even $10 per paycheck is something, as long as you do it consistently. 

Most importantly, remember that a payday loan is just one way to borrow. Chances are, you've got other ways to get money when you need it without having to go to a payday lender. We'll wrap things up with a quick rundown of the alternatives a little later. 

When a payday loan might be the only option

A payday loan may truly be your only option if you've exhausted all other possibilities for getting the money you need. For example, maybe you've been denied loans or credit cards because of poor credit. You don't have a support system of friends and family who can help financially. And while you're trying to make extra money, you can't wait for those funds to show up in your bank account. 

In those cases, a payday loan could help you get cash quickly, even the same day as you apply with some lenders. Needing a payday loan isn't anything to be embarrassed about; financial hardships happen. The key is to be smart about borrowing to minimize the risk to yourself. 

• Borrow just what you need. Since Nevada payday loans don't cap interest rates, it's important to only borrow what you need. It may be tempting to get a larger payday loan just in case but that could set you up for higher costs. 

• Read before you sign. Lenders are required by state law to give you a loan agreement, so take time to read it before you sign. If anything is unclear or doesn't make sense, ask for clarification. And if a lender tries to dodge your questions or gives you muddy answers, those are red flags that can signal dishonest lending practices.  

• Avoid renewal. Renewing a payday loan just means you pay more fees, without paying down the amount you borrowed. Look at your budget and bank account to make sure you can repay the loan in full on the due date, and if a lender offers an extension for what seems like a minimal fee, just say no thanks. 

Safer alternatives to payday loans

Needing money doesn't mean you have to be locked into a risky or predatory loan. Here are some safer options to consider when you're strapped for cash. 

Credit cards

You could use a credit card to cover day to day living expenses or minor emergencies, whether that's an unexpected car repair or an unplanned trip to the doctor. If you can qualify for a card with a 0% introductory APR, you may pay no interest on purchases, as long as you pay the balance in full before the promotional rate period ends. 

If you're tempted to get a credit card cash advance, be aware that cash advance APRs can be much higher than the standard APR. Interest also starts to accrue right away on cash advances; these transactions don't offer a grace period. 

Earned wage access

Earned wage access lets you get an advance on your paychecks through your employer, instead of a payday lender. You may be able to access some or all of your earnings early, and pay it back from your next check. 

If your job offers this benefit, review the details carefully. While some earned wage access providers don't charge interest and fees, others do. Those fees can, in some cases, make earned wage access just as costly as payday loans. 

Personal loans (banks or credit unions)

A personal loan is a loan you get for personal reasons. These loans are usually unsecured, which means you don't need to offer any collateral to qualify. You can even get bad credit personal loans, though your rates are likely to be higher compared to someone with good or excellent credit. 

Personal loans can let you borrow larger amounts than you could get with a payday loan, and interest rates are typically fixed. That means you can calculate exactly how much the loan will cost. Many lenders allow you to choose your loan term so you can get a monthly payment that fits your budget. 

Payday alternative loans (PALs)

Payday alternative loans (PALs) are credit union loans that let you access anywhere from $200 to $1,000 of your pay early. You'll need to join a credit union to apply for one of these loans, but many credit unions extend membership to everyone. 

Typically, you'll have 1 to 6 months to repay a payday alternative loan. Lenders may charge a processing fee when you're approved. 

Credit-builder loans

Credit-builder loans are small-dollar loans that put a spin on traditional lending. With these loans, the amount you're approved for is deposited into a secure account, which may earn interest. You make monthly payments toward the balance, which are reported to the credit bureaus. At the end of the loan term, the loan proceeds are turned over to you, along with any interest earned. 

A credit-builder loan may not help much in a financial emergency, but it's something to consider if you'd like to build or rebuild a positive credit history. Improving your credit could help you qualify for other types of loans down the line. 

State-specific assistance programs

State assistance programs are designed to help individuals and families in need. Nevada residents may be able to get help with medical expenses, food, energy costs, housing, and childcare. 

These programs don't guarantee that you'll receive funds quickly, and you'll need to qualify to get help. Eligibility is usually based on your household size and income. However, state-based programs may help ease financial strain in the longer-term, so it's still worth looking into these options to see what you might qualify for. 

Borrowing from family and friends

Friends and family may be willing to help you out with a loan when times are tight. They may even be willing to offer a loan with no interest, which could save a lot of money compared to a payday loan. 

Keep in mind that borrowing from people you know can lead to hurt feelings if expectations about how and when the loan will be repaid aren't clear from the start. Offering to sign a promissory note for a loan could offer the person who's giving you the money some reassurance. 

If you're worried about hurting a personal relationship over money, then you might only consider this option as a last resort. 

Side hustles

Side hustles let you earn the money you need instead of borrowing. Since you're not getting a loan, there's no interest to pay and no monthly payment to try to work into your budget. Some side hustles offer same-day pay, which means you don't have to wait for your next check to get cash. 

If you're unsure what type of side hustle to start, think about your skills, experience and interest. Factor in what assets you have, like a computer with an internet connection that you could use to do work online, or a well-maintained vehicle you could use to deliver food or groceries. 

Conclusion

While payday loans are legal in Nevada, they may not be the best choice when you need to borrow. Because state law allows lenders more leeway in determining what interest rates and fees to charge, payday loans have the potential to be expensive here. 

Before you commit to a Nevada payday loan, weigh the risks and explore safer alternatives to high-cost credit. For example, MoneyLion Instacash allows you to tap up to $500 of your pay when you need it, with no interest, credit checks or mandatory fees. You can get your money in 1 to 5 business days, or instantly for a fee. 

And once an emergency need passes, think about how you can reduce the need for short-term loans going forward. Developing a solid budget, exploring side gigs and building an emergency fund can give you a stronger defense the next time a financial crisis hits. 

FAQs

What is the maximum loan amount I can borrow in Nevada?

Nevada law doesn't specify a maximum dollar amount for payday loans. Instead, the law limits you to borrowing 25% of your gross income. 

What fees and interest rates can payday lenders charge in Nevada?

Nevada law doesn't cap payday loan rates. Lenders may charge up to two insufficient funds fees of $25 each. Other fees, including origination fees, application fees or processing fees, must be reasonable, but state law doesn't specify a maximum dollar amount. 

How long do payday loans last?

In Nevada, the maximum payday loan term is 35 days. You can extend your loan for up to 90 days. That's typical of payday lending in other states. 

Will a payday loan affect my credit score?

A payday loan may not affect your credit score when you apply, since lenders can offer these loans with no credit check. Repaying a payday loan may have no impact either if the lender doesn't report those payments to the credit bureaus. A payday loan could, however, hurt your credit if you default and the lender reports an unpaid balance to the credit bureaus.

Can I get a payday loan with bad credit?

Yes, it's possible to get a payday loan in Nevada with bad credit or no credit at all. It's not unusual for payday lenders to offer these loans with no credit check required. The trade-off, however, is that you're likely to pay a much higher fee than you would with loans that do check your credit first. 

What should I do if I can’t repay my payday loan on time?

If you can't repay a Nevada payday loan on the scheduled due date, reach out to your lender. You may be able to extend the loan up to 90 days. Keep in mind that the lender may charge a service fee to allow you to do so.

Sources

• Nevada Legislature - Chapter 604A - DEferred Deposit Loans, High-interest loans, Title Loans and Check-Cashing Services

• Federal Trade Commission - What To Know About Payday and Car Title Loans

• My Credit Union - Payday Alternative Loans

• Federal Reserve - An Overview of Credit-Building Products