Payday lending isn’t permitted in your state, but you need a quick cash loan. What now?
Coming up short on bills, requiring emergency repairs or needing to make a sudden but necessary purchase when you’re low on cash is enough to make anyone panic. You’ve reviewed your options, and a payday loan sounds like the best fit. There’s only one problem: The state you currently live in prohibits payday loans.
All hope is not lost. We review potential avenues you can take to possibly get a short term loan or explore an alternative solution.
Are payday loans permitted in my state?
States authorize different laws and statutes around payday lending. The reason for these differences lies in how each consumer protection office handles high-risk borrowing.
If you’re unsure whether your state allows payday loans, check out the interactive map below for payday lending regulations in your state:
Payday loans are prohibited in my state. Can I get one in another state?
The short answer is no. But the long answer is a soft maybe.
If your permanent residence is in a state that allows payday loans but you’re temporarily living in another state, you may be able to get a loan. Getting a payday loan could require more interaction with the provider to confirm your permanent residence versus your temporary one.
Whether you’re applying online or in store, there’s no guarantee that the lender will approve you — even if you’re only temporarily in another state.
A payday loan in your state could be a sign of a scam
When you see payday loans advertised in states where they’re prohibited, it should be an immediate red flag. Predatory lenders are known to work around legislation, and can end up trapping you in a debt cycle.
Even worse, you could be called for collections on a loan you didn’t take out. Scam artists will sometimes fake being a collector for a loan you may have applied for but didn’t end up accepting.
Learn more about how to protect yourself from a payday loan scam.
Do I have to repay a payday loan if I got it in a state where it’s prohibited?
It depends. You’ll first want to see if the loan you took out is actually prohibited in your state. Some lenders market a loan as a “payday loan” when it doesn’t fit the requirements required by the state’s legislation.
Once you’ve confirmed it’s illegal — either because it’s prohibited by law or borrowed from an illegally operating lender — you can find out whether you’ll need to pay it back. In some states, you’re only required to repay the principal. Others states require that you pay back the entire amount, interest and all.
To find out whether you need to repay a payday loan, contact your state’s consumer protection office — they should be to provide information on what is and isn’t legal when it comes to short-term lending.
Can I have multiple payday loans at one time?
Depending on the lenders, you may be able to take out more than one payday loan simultaneously. Usually you must have repaid a certain percentage of your existing loan before being eligible for a second one. When you’re applying, ask the provider for its policy or check its FAQ page for details.
Some lenders restrict borrowing multiple loans, and others go as far to prohibit consecutive borrowing within a specified period of time. If you’re looking to take out a second payday loan, it may be time to reevaluate your situation. Getting into a cycle of payday loan borrowing can be very difficult to get out of.
What are some alternatives to payday loans?
With the possibility that you can’t borrow from a payday lender and the risk of getting into a debt cycle. We have a whole guide to exploring alternatives, but here’s the shortlist:
- Installment loans are another form of short-term lending. They are typically less regulated than payday loans and may offer better interest rates.
- Asking family or friends for help can end up getting you an interest-free loan. While it can be hard to take that first step, you may find that you’re loved ones are happy to help.
- Talk with your creditors if making repayments is an issue. You may be able to negotiate a different plan.
- If you’ve got some time, consider looking for credit counseling. A community assistance program can work with you to get your finances under control, often for free.