Fees for Payday Loans
Under California law, the maximum loan amount a consumer can borrow in a payday loan is $300. The maximum fee a payday lender can charge is 15% of the face amount of the check (up to a maximum of $45). Additional fee restrictions apply for military service members and their dependents.
The fee is equivalent to an annual percentage rate (APR) of 460% for a two-week loan. The actual APR may vary, depending on the term of the loan.
If You Take Out a Payday Loan
Borrow only as much as you can afford to pay back in full on your next payday. On the loan due date, some borrowers find they cannot afford to pay back the loan. Borrowers are encouraged not to take out a second loan from another payday lender to repay the first, as this can lead to a cycle of debt from which it will be expensive and difficult to recover.
Loans to Military Members & Their Dependents
Because of recent changes in federal and California law that restrict payday loan fees for military service members and their dependents, some payday lenders may choose not to make loans to service members and their dependents.
California Payday Lending Laws Protect You:
- In California, all payday lenders must be licensed by the Department of Business Oversight. Use the Department's website or call toll-free to verify a lender's license or to file a complaint. (866)275-2677.
- A payday lender may only make you one loan (which cannot exceed $300), and may only charge a maximum fee of 15% of the total amount of the check (up to $45). Additional fee restrictions apply for military service members.
- Payday lenders are required to visibly post their CA license and a fee schedule at every location.
- A payday lender cannot make you a new loan to pay off an existing loan.
- A payday lender cannot make you a new loan while an existing loan with the same lender is outstanding, even if the combined balance of the existing loan and the new loan does not exceed $300.
- If your check bounces, the payday lender may charge only one bounced check fee (up to $15).(Be careful! your bank may charge you additional fees for insufficient funds.)
- Additional fees cannot be charged if you request an extension of time or payment plan. However, the payday lender is not legally required to grant your request.
- By law, the contract for a payday loan must be provided to you in the language you primarily used to negotiate with the lender.
- A payday lender cannot threaten to prosecute you in criminal court for insufficient funds.
- You may also have other legal protection under California law. If you need help or suspect violations of the law, please contact the Department of Business Oversight at (866)275-2677.