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

If you live in Idaho, have a risky financial profile and need fast cash for emergency expenses, a small-dollar, short-term payday loan might seem like a viable option. But hitting up one of the Gem State’s 200 or so storefront payday lenders comes with a high price.  

In Idaho, payday lenders charge, on average, an annual percentage rate (APR) of 652% for a single-payment $500 payday loan, per The Pew Charitable Trusts. That’s the highest rate among states that still permit payday lending. 

In this guide, we’ll cover Idaho’s payday lending laws and how to find more affordable short-term financing.

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Are payday loans legal in Idaho?

Payday loans are legal in Idaho. In fact, the Gem State has some of the most permissive usury laws in the nation. Under the Idaho Credit Code, last updated in 2014:

• The maximum payday loan amount is $1,000 or 25% of a borrower’s gross monthly income (whichever is lower).

• Payday lenders can only offer three consecutive loan renewals to borrowers.

• Borrowers can request and transition to an extended payment plan (EPP) once every 12 months. This plan lets them repay their outstanding balance in at least 4 equal payments over at least 60 days without incurring new fees or interest.

Unlike other states, however, Idaho doesn’t impose APR caps on payday loans, allowing lenders to effectively charge whatever they want. It also doesn’t require minimum or maximum loan terms, so payday loans in the state often come due within the traditionally tight two- to four-week window.  

How payday loans work in Idaho 

Payday loans in Idaho are short-term, deferred deposit transactions secured by a post-dated check or an authorized electronic funds transfer from the borrower’s bank account.

To take out a payday loan in Idaho:

• You apply with a storefront or online lender. They most often require a government-issued ID, Social Security number, proof of income and proof of residence. Some may ask for a post-dated check to secure the loan.

• Lenders review your application. While most skip traditional credit checks, they all must make a reasonable attempt to ensure you’re within the state’s borrowing limits. 

• You receive a written loan agreement. Idaho requires payday lenders to disclose fees as a dollar amount per $100 borrowed. It also requires loan agreements to include the loan’s due date, principal and APR.

• Lenders disburse your funds in cash, a business check, a money order, an electronic funds transfer or another electronic payment method.

• You repay. On your due date, the lender deposits your check or initiates an electronic debit. Idaho law limits lenders to three attempts to collect the debt. They can also charge only a return check fee of $20.

Idaho payday lenders must have a license and comply with the state’s credit code. If they don’t, they might be operating illegally.  

The risks and dangers of payday loans

Traditional payday loans are risky, no matter where you reside. But Idaho’s loose restrictions leave its residents particularly vulnerable as: 

• Costs run high. Payday loans are known for their triple-digit borrowing costs, but Idaho’s lack of a cap effectively allows lenders to charge as much as they want. Unsurprisingly, the state’s payday loan APRs are among the highest in the U.S.

• Loan terms are short. Idaho imposes no minimum or maximum loan term, leaving repayment windows up to the lender. Many follow the traditional 14- to 30-day single-payment window.

• Rollovers are common. A Consumer Financial Protection Bureau (CFPB) report found nearly half of Idaho borrowers renewed their payday loans, despite the state’s EPP mandate.  

• They’re also expensive. In Idaho, borrowing the same $500 repeatedly over four months will cost $1,000 in fees, Pew found. 

Due to these factors, bad-credit, cash-strapped borrowers are at high risk of entering a prolonged debt cycle. If they ultimately default, they could face persistent collection efforts, lawsuits (and legal fees), wage garnishment and long-term credit and cash flow issues.

How to avoid the payday loan trap

To avoid these problems, it’s best to avoid payday loans. To potentially do so:

• Build a micro-emergency fund. Saving $100 to $300 in a high-yield account, even over several months, could sufficiently cover the small emergencies that typically drive people to payday lenders.  

• Contact creditors or service providers to inquire about hardship programs. At the very least, see if you can move your bill’s due date to after your next payday. 

• Talk to your employer. Some offer paycheck advances, short-term employee loans or free financial counseling through Employee Assistance Programs (EAPs). 

When a payday loan might be the only option

Nearly 11% of Idaho residents live below the federal poverty level, and just over 40% of households don’t earn enough to comfortably cover all their living expenses.

If you’re among them, have no or bad credit and face a cash shortage, you might have to pursue payday loans. However, it’s best to restrict their use to financial emergencies. For instance, say you need to buy a certain medication to preserve your health or make car repairs to keep your job. 

In these instances, the following strategies could help mitigate the damage from payday loans.

• Know your rights. Idaho payday lenders can’t charge fees that aren’t explicitly authorized by law. They also can’t sue for treble damages or threaten you with criminal prosecution if you can’t pay.

• Borrow only what you need from licensed state lenders. If you feel they violated state law, you can file a complaint with the Idaho Department of Finance. Its online search tool helps you verify a lender’s license. 

• Request an EPP. Idaho’s laws require you to request and obtain this plan in writing before your loan’s due date. Lenders can’t charge extra fees for an EPP. They also can’t try to collect or sue for the debt while you’re making timely payments. 

Safer alternatives to payday loans

Credit cards

Credit card grace periods, a 21-day timeframe in which new purchases don’t accrue interest, could help you better manage cash flow in between pay periods. 

There are starter credit cards that might accept applicants with no or fair credit. They tend to carry low credit limits, but a few hundred dollars is often enough to cover small financial emergencies.   

Earned wage access

Earned wage access (EWA) products let you draw on wages you've already earned before payday, often at little or no cost. 

Instacash from MoneyLion, for example, offers advances of up to $500, with no credit inquiry and funding in 1 to 5 business days. 

Personal loans (banks or credit unions)

Traditional unsecured personal loans offer lower APRs, usually between 8% to 26%, and more flexible repayment terms, ranging from 1 to 7 years. 

They’re harder to qualify for than payday loans, but a community bank might be willing to lend to someone with imperfect credit, especially if there’s a pre-existing relationship.

D. L. Evans Bank, Citizens Community Bank and Federal First Bank are among the Idaho-based financial institutions that advertise personal loans on their websites. 

Payday alternative loans (PALs)

Under guidance from the National Credit Union Administration (NCUA), financial cooperatives often offer small-dollar, short-term credit at lower APRs (not to exceed 28%) and with longer repayment windows, usually six to 12 months. 

Your local credit union might offer PALs, even if they’re not openly advertised.

Credit-builder loans

Many Idaho-based community banks and credit unions, including Citizens Community Bank and Idaho Central Credit Union, offer credit-builder loans.

These “loans” won’t cover an immediate cash gap. (The borrowed funds sit in a savings account until you repay via several installment payments.) But they help you save and establish credit, so you don’t have to rely on payday loans long-term.

You can also get a credit-builder loan with a MoneyLion Credit Builder Plus membership. 

Idaho-specific assistance programs

If you’re struggling to afford essentials, these state benefits programs might help:

• Low Income Home Energy Assistance Program (LIHEAP) helps eligible households pay heating costs from October through March.

• Emergency Food Assistance Program (TEFAP), run by the Idaho Department of Health and Welfare, supplies free food boxes to eligible residents through local pantries and soup kitchens.

• Community Services Block Grant (CSBG) funds local agencies to assist with housing, nutrition, transportation, employment and emergency services.

You can identify other assistance programs by calling 211 or visiting the Idaho 211 website.

Borrowing from family and friends

Trusted loved ones might lend you money to get over an income gap, and they probably won’t require a credit check. They might also forego fees or interest. To preserve your relationships, consider carefully whom you ask; it’s best not to put someone else in a bind. 

You could also preclude problems by having a formal loan agreement, a firm repayment date and a method for making transparent payments, like Zelle or Venmo.

Side hustles

Supplemental income can bolster savings and potentially help you side-step costly short-term credit. Idaho-specific side hustles include outdoor guide or outfitter work, seasonal agricultural jobs or rideshare driving in Boise or Idaho Falls.

Conclusion

Payday loans in Idaho are legal, but the state hasn’t instituted a cap on their APRs, so their costs run high. Plus, there are other default risks, thanks to short repayment terms and low approval thresholds.

As a result, Gem State residents should explore credit union PALs, state assistance programs, EWA tools or other short-term credit alternatives. (Some personal loans consider applicants with bad credit.) You could minimize the odds of taking out a payday loan by establishing an emergency fund, building good credit and closely monitoring your spending.

FAQs

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

The maximum payday loan in Idaho is $1,000 or 25% of your gross monthly income, whichever is less. You can’t owe more than this amount at any given time to one or multiple payday lenders. 

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

Idaho has no cap on payday loan APRs or finance charges. However, lenders must clearly disclose total borrowing costs in writing, and they can’t charge ancillary fees that aren’t expressly permitted under the state’s credit code. Payday loan APRs in Idaho can run over 600%.

How long do payday loans last?

Idaho law sets no minimum or maximum loan term. Most loans come due on the borrower's next payday, typically in two to four weeks.

Will a payday loan affect my credit score?

​​Most payday lenders don’t report on-time payments or other activity to the major credit bureaus, so these loans rarely improve your credit score. However, payday loans can significantly harm your credit if your unpaid debt is sold to a collection agency or if it results in a civil judgment or wage garnishment.

Can I get a payday loan with bad credit?

Most Idaho payday lenders don’t perform traditional credit checks. They must check to see that you haven’t exceeded state borrowing limits, but, beyond that, their standards are typically lenient, meaning you could get a payday loan with bad credit. Given the high costs of this credit, however, it’s worth exploring all of your payday loan alternatives. 

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

Idaho residents should contact a payday lender before the due date and ask for an extended payment plan (EPP). State law requires payday loan companies to offer one free EPP every 12 months. These plans afford you at least four equal payments over at least 60 days, at no additional charge.

Sources

• Pew.org - Payday Loans Cost 4 Times More in States With Few Consumer Protections

• Legislature.idaho.gov - Idaho Credit Code

• Finance.idaho.gov - Idaho Department of Finance Website

• Files.consumerfinance.gov - Consumer Use of State Payday Loan Extended Payment Plans

• Unitedforalice.org - The State of ALICE in Idaho