Like most of the world, Americans are scrambling to figure out how to get themselves through the 2020 economic crash. Maybe you’ve looked into a payday loan to get some quick cash into your pockets. But if you live in New York, payday loans are illegal.
Although it’s against the law to get a payday loan in New York, some lenders have figured out loopholes. We are going to go through what a payday loan is, why they are illegal in New York, and how to borrow safely.
Options For Payday Loans in New York
Traditional payday loans are short term cash advances with high interest rates and fees that are repaid on your next payday. Hence, the coined name “payday” loans.
Like many states, New York banned payday lending through its criminal and civil usury laws. Payday loans are known for extremely high APRs, up to 400% APR or more! These types of loans are not based on the abilities of a person to pay them back; therefore, they often trap low-income individuals into a cycle of debt.
Random Online Lender
Some online lenders will allow you to get unsecured personal installment loans and title loans. You are required to give your personal information, employment status, income, and run your credit. After researching a few of these online New York lenders, you’ll notice that they’re all the same websites with slightly different names.
The even trickier part is that some of these online lenders will advertise as a New York lender, but their actual business is in another state. While the state of New York as a 25% APR cap on all loans, these types of lenders send their APR up to 35.99% APR or more because they are under law in the state the business resides. Not to mention the origination fees and penalties that you could be charged with these unsecured loans.
Our advice, beware of these types of lenders!
In-Person Lender
Never allow a lender to convince you that payday loans in New York are legal in person, by telephone, or online. New York Banking Law 373 prohibits check cashers from giving payday loans: “No licensee shall at any time cash or advance any moneys on a post-dated check or draft or engage in the business of transmitting money or receiving money for transmission. …”
You can, however, get car title loans (also known as car pawn loans) and different forms of installment loans in-person in New York. A title loan or car pawn loan is when you use your vehicle as collateral, and the lender holds your vehicle’s title until you pay off the loan. If you fail to pay the loan, they repossess your vehicle. These types of loans are advertised to those with bad or no credit in desperate situations.
Installment loans, such as personal loans, give you a lump sum, and you have set payments including interest that are made over a loan term. Both types of loans usually have very high interest rates, astronomical penalties, and late fees.
Payday Loan Alternatives in New York
Since payday loans are illegal in New York, what are the alternatives? Below we share our favorite safe and affordable MoneyLion options!
Instacash
Need to cover your cellphone bill, but you’re a little short on cash? Not a problem! Instacash with MoneyLion allows you to borrow up to $250 right from your mobile app or computer instantly. Within minutes, you’ll have cash direct deposited into your bank account.
Whatever amount you borrowed, we will set you up with automatic deductions on your next direct deposit payday. No credit checks, and we let you borrow money with 0% interest rates. Yes, we said zero.
Credit Builder Loans
Need more than $250 to hold you over for the next few months? A Credit Builder Loan is perfect for those of your with less than perfect credit score. For only $19.99/month, MoneyLion Credit Builder Plus membership gives you up to $1000 with competitive APRs, as well as access to 0% APR Instacash.
We will help you boost your credit by reporting your on-time loan payments to all three major credit bureaus. You’ll have access to your credit score and free fully managed investing if you choose as well. Borrowing and saving is simple as 1, 2, 3!
Apply for a Credit Builder Loan
| Instacash | Credit Builder Loan | Title Loan | Installment Loan | |
| How Much Can You Borrow (max)? | $250 | $1,000 | Depends on value of vehicle | $2,000-$40,000 |
| Fees & Interest | 0% APR* | Competitive APR, $19.99/month fee | APR Varies Up to 35% | APR Varies 6.95%-35.99% |
| Impacts Your Credit? | No | Yes, it builds your credit score. | Negative marks on your credit if you miss payments | Negative marks on your credit if you miss payments |
| Availability | Online & Mobile | Online & Mobile | Online & In-Person | Online & In-Person |
| Wait Time | Instantly* | Instantly | Next business day | Next business day |
| Next Steps | Sign Up | Sign Up | Apply Online or In-Store | Apply Online or In-Store |
*24-48 hours to receive your advance at 0 cost. $3.99 for instant deposit to your MoneyLion bank account, $4.99 to instantly deposit to an alternative bank account.
Be Aware
With all the loopholes and confusing information about loans, it’s enough to make your head spin! Keep more of your money and borrow smart with MoneyLion.
