Payday Loan in Oklahoma City: Are They Legal and How Do They Work?

If you live in Oklahoma City, have tarnished credit and are suddenly faced with an emergency cash shortfall, you can technically take out a payday loan, but they’re likely to carry a high price tag.

Although regulated, payday loans in Oklahoma City, also known as deferred deposit loans, can carry an annual percentage rate (APR) of up to about 200%. As a result, it’s helpful to know your rights and alternatives. 

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.

Are payday loans legal in Oklahoma City?

Payday loans are legal in Oklahoma City and Oklahoma at large, but they’re restricted under state usury laws and regulated by the Oklahoma Department of Consumer Credit (ODCC).

Under the Oklahoma Small Lenders Act, payday lenders in Oklahoma City must:

• Limit the principal amount of a borrower’s outstanding payday loans to $1,824.60, an amount adjusted every other year to account for inflation

• Require no collateral; all payday loans must be unsecured

• Ensure scheduled monthly loan payments don’t exceed 20% of a borrower’s gross monthly income

• Log loans in a private database that ensures maximum limits per borrower are met

• Charge no more than 17% interest per month (the equivalent of a roughly 200% APR)

• Offer repayment terms between 60 days and 12 months with no prepayment penalties and the option to pay in installments 

Providers must also hold a small lender license. If a lender, online or otherwise, is operating without a license or offering loans that violate these parameters in Oklahoma City, they’re doing so illegally. 

How payday loans work in Oklahoma City

Oklahoma laws provide additional consumer protections during the application process. Here’s how payday loans in Oklahoma City typically work:

1. You visit a lender’s store or website. You can also call them directly. Oklahoma City lenders must ensure licensing and regulator contact information (for the purpose of filing complaints) is publicly available. 

2. You fill out an application. Lenders typically require a valid government ID, proof of residence and proof of income. 

3. The lender verifies your information. While many skip traditional credit checks, they must confirm your ability to repay using Oklahoma’s monthly gross income requirement. They must also consult the statewide database to see if you have outstanding payday loans.   

4. You receive a loan agreement. Before transferring funds, the lender must provide a written disclosure outlining the loan’s fees, interest, total costs and payment schedule. They must also inform you of your right to cancel the loan before the end of the next business day.    

5. You sign the agreement and receive your funds, usually via cash, direct deposit, a pre-loaded debit card or another electronic transfer method.

6. You repay the loan as agreed, usually with cash, a money order, a debit or prepaid card, an ACH payment or a remotely created check debit (RCC payment). If you’ve signed off on electronic payments, the lender must notify you before initially transferring funds. They must also seek written approval to debit your account a second time if the loan payment is returned for insufficient funds.         

Oklahoma state law includes a few provisions to help borrowers who are in or at serious risk of default. For instance, lenders must provide borrowers in default with a list of approved credit counselors. They also limit recoupment of debt collection attorney fees to 15% of the outstanding amount.  

The risks and dangers of payday loans

Payday loans are high-cost, small-dollar loans with tight repayment terms, usually 2 to 4 weeks. While Oklahoma has restrictions on payday loans, they still come with the following risks:

• They charge high APRs up to roughly 200%, meaning a 60-day loan would cost $34 in interest for each $100 borrowed.

• They may incur ancillary charges. For example, Oklahoma law permits lenders to collect a $25 fee if a loan payment bounces because of insufficient bank account funds.

• They often involve automatic payment withdrawals, which can incur separate costly bank fees or even result in account closure. 

• They require little barrier to entry. While Oklahoma City lenders need to ensure monthly loan payments don’t exceed 20% of your monthly gross income, they aren’t required to conduct traditional credit checks and can lend to borrowers with bad credit. 

• They come with renewal options, which is one reason payday loans have long been associated with long cycles of debt. However, Oklahoma’s law on total outstanding loan amount could help mitigate total borrowing costs over time. 

Borrowers who fully default on a payday loan are also vulnerable to debt collections, lawsuits, and wage or bank account garnishments. These adverse actions can do significant damage to their long-term financial health.

How to avoid the payday loan trap

These steps can help you avoid payday loans and any subsequent debt cycles:

• Draft a budget, using MoneyLion’s budgeting tools to track where your money is going, set savings goals and monitor weekly spending.

• Automatically transfer a small amount of each paycheck, even $5 to $20, into a savings account to build an emergency cash reserve. 

• Seek financial counseling if your finances are getting tight or debts are mounting. Nonprofit credit counselors often offer free financial advice and will set up a debt management plan for you, usually for a small fee.  

When a payday loan might be the only option

A payday loan in Oklahoma City might be your only option if you need funds, have poor credit and can’t qualify for traditional financing. 

Still, given the exorbitant costs, it’s best to only pursue one for true financial emergencies. These instances might include fixing your car to avoid losing your job, purchasing life-saving medications or paying the rent to stave off immediate eviction.

If you take out a payday loan in Oklahoma City, you could minimize damages with these steps:

• Borrow from a licensed lender, so issues are easier to dispute. You can verify a lender’s license on the ODCC’s website.  

• Request only what you need to cover the financial emergency, and not additional discretionary expenses.

• Explore term options to ensure you can repay. Oklahoma requires lenders to offer longer repayment terms and installment payment options. 

Safer alternatives to payday loans

You can also avoid payday loans with these alternatives.

Credit cards

Most credit cards come with a grace period, which affords you 21 to 25 days to pay off purchases without accruing interest. They also offer lower APRs than payday loans, typically ranging from 19% to 28%. 

Earned wage access

Earned wage access (EWA) products are newer market entrants that let employees access accrued wages in between paychecks, often without a credit check and low-to-no fees.

For example, Instacash, an EWA product from MoneyLion, lets you tap up to $500 in wages fee-free within 1-5 business days; it charges no interest.  

Personal loans (banks or credit unions)

Your local bank or credit union might be willing to offer you a traditional unsecured personal loan, especially if you have a strong, pre-existing relationship. Traditional personal loans charge much lower APRs, typically between 8% and 36%. Plus, they offer more flexible repayment terms.

Banks in Oklahoma City that advertise personal loans include First Liberty Bank and MidFirst Bank.

Payday alternative loans (PALs)

Credit unions also offer a product known as a payday alternative loan (PAL) that features lower APRs and more flexible repayment terms than payday loans.

Veridian Credit Union, which allows Americans nationwide to join, offers PALs of up to $1,000 with APRs starting at 19% online. They carry a $25 application fee, though. 

Credit-builder loans

A credit-builder loan isn’t an option if you need short-term cash. However, it could be a fruitful alternative if you were considering a payday loan, hoping it would help you build or rebuild credit.

Unlike payday loans, credit-builder loans typically report to the major credit bureaus. Plus, credit-builder loans carry little to no risk. You don’t borrow money; the bank deposits your loan into an interest-bearing account you get access to once all payments are made. 

MoneyLion offers credit-builder loans through its Credit Builder Plus membership.

State-specific assistance programs

Oklahoma City, the broader state and known community groups offer the following assistance programs for residents facing financial hardship.

• Bill Pay Assistance, run through Oklahoma City’s Utilities Department, helps residents secure payment extensions and installment plans for water, trash and other services.

• Upward Transitions offers rent assistance to eligible families or seniors age 55 or older in Oklahoma County or Oklahoma City limits.

• The Oklahoma Department of Human Services hosts a dedicated website where eligible residents can apply for Temporary Assistance for Needy Families (TANF), SoonerCare health insurance, the Supplemental Nutrition Assistance Program (SNAP) and other benefits.

You can identify other local assistance programs by calling the Oklahoma Heartline. 

Borrowing from family and friends

Borrowing from a trusted loved one could prove worthwhile, especially if they’re willing to waive fees and interest. You could avoid awkward situations by creating a formal loan agreement that lists the exact amount borrowed and the scheduled repayment dates.

Side hustles

Some Oklahoma City side hustles include rideshare and delivery driver roles, tasking services, junk removal and house-cleaning for local Airbnbs.

Conclusion

Payday loans are legal in Oklahoma City, though the state restricts and closely regulates them. Lenders must abide by borrowing and interest rate caps. They also must offer longer repayment terms and allow installment payments. 

Despite these rules, payday loans in Oklahoma City can still prove risky and expensive. Before resorting to one, explore other options, such as local assistance programs, EWA products and personal loans with better approval odds.   

FAQs

What is the maximum loan amount I can borrow in Oklahoma City?

Oklahoma City residents can borrow up to $1,500 in total principal from licensed payday lenders at one time, under the state's usury laws. They also can’t take out a payday loan with monthly payments that exceed 20% of their monthly income. Oklahoma City doesn’t have other hard borrowing caps, though there are laws governing fees and interest on other loan amounts. 

What fees and interest rates can payday lenders charge in Oklahoma City?

The Oklahoma Small Lenders Act prohibits Oklahoma City payday lenders from charging more than 17% interest per month, which is roughly equivalent to a 200% APR. The law permits some ancillary fees, including a $25 charge for returned payments. 

How long do payday loans last?

In Oklahoma City, a payday loan must carry a repayment term of at least 60 days and up to 12 months, and lenders must offer periodic repayments. Traditionally, payday loans last between 2 and 4 weeks, and are paid off in one lump sum. 

Will a payday loan affect my credit score?

A payday loan generally won’t positively impact your credit score as repayments are rarely, if ever, reported to the major credit bureaus. A payday loan can hurt your credit score if you don’t repay as agreed, and it results in collection activities. 

Can I get a payday loan with bad credit?

You can get a payday loan with bad credit, which is one of the reasons they’re quite risky. Lenders typically have to do little to verify your ability to repay, though in Oklahoma City, they must confirm that monthly payments won’t exceed 20% of your gross monthly income.  

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

If you can’t repay a payday lender, contact them directly to ask whether they offer hardship programs or extended repayment plans (EPPs). Oklahoma doesn’t require lenders to offer these, but some might anyway. Lenders are required to provide you with a list of state-approved credit counselors if you are in default. These organizations can help you with money management and debt repayment, sometimes for a fee. 

Sources

• Oklahoma.gov - Supervised (Payday) Loan Company

• ODCC’s website - Oklahoma Department of Consumer Credit

• Billtrack50.com - OKSB720

• Oklahoma.gov - Change in Maximum Aggregate Principal

• Consumerfinance.gov - What is a payday loan? 

• SoFi.com - Fixed vs. Variable: Choosing the Right Personal Loan Rates

• Okc.gov - Oklahoma City’s Utilities Department

• Upwardtransitions.org - Bill Pay Assistance

• Upwardtransitions.org - Upward Transition

• Okdhslive.org

• Oklahoma.gov - The Oklahoma Department of Human Services

• Heartline.ok.networkofcare.org Oklahoma Heartline