While payday loans are legal in Alabama, the high rates and fees often lead to APRs in the triple digits. Before you borrow, make sure you can afford repayments to avoid ending up in a cycle of debt.
Yes, payday loans are legal in Alabama and governed by state statute 5-18A-1 et seq. The laws are the same for both storefront locations and online lenders, and lenders are required to have a valid license when operating in Alabama.
The maximum amount payday lenders are allowed to offer is $500 with a maximum APR of 456.25%. Terms can range from 10 to 31 days, and you can roll over your loan once.
Because payday loans come with such high costs that can be difficult to pay back on schedule, borrowers often find themselves in a cycle of debt — having to borrow more to pay back their current loan. Because of this, Alabama lawmakers are considering limiting the number of payday loans you’re able to borrow per year. This isn’t set to change for another few years, but keep an eye out.
Whenever you borrow money from a payday lender, expect to pay high rates and fees. You may also be charged a fee for making a late payment or extending your loan term.
Payday loans can be dangerous if you aren’t prepared for the high fees that come with them. As with all credit products, be sure you can repay what you borrow before you sign a contract.
If you’re just struggling to cover day-to-day expenses, state programs like the Alabama Department of Human Resources Food Assistance Division, Alabama Medicaid Agency, Low Income Home Energy Assistance Program (LIHEAP) and Debt Reduction Services may be able to help.
Don’t forget to look into alternatives to a payday loan before you apply
While eligibility criteria vary by lender, you typically need to meet the following requirements:
When applying, you’ll likely have to provide personal information, including your Social Security number and bank account details. Have these and other documents — like your government-issued ID — on hand to speed up the application process.
Alabama’s minimum age to take out a loan is 19 — compared to 18 in most other states. If you’re 18 years old and need a loan in Alabama, you’ll have to wait until your next birthday or apply for a loan with a cosigner.
While payday loans are legal in Alabama, they’re best saved as a last resort due to the high costs and short terms. Learn more about how they work with our guide to payday loans.
If you have all the required information, you can complete most applications in 10 to 15 minutes.
Your lender may be willing to put you on an extended repayment plan that consists of four equal monthly installments. Reach out to your lender to review your options.
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