According to the CFPB, the average two-week payday loan is $350 in the United States. However, based on your state’s legislation, payday loans might be available anywhere from $300 to $50,000 (which is not exactly a payday loan per se). Currently, 32 states permit payday loans with a maximum loan amount cap.
The highest cap amounts are $50,000 in Oregon, followed by $1,000 in Delaware, Idaho, and Illinois, while $300 is the lowest in California and Montana. Each payday loan can only be up to 25% of the consumer’s monthly salary in some areas, such as Nevada and New Mexico.
How much can I borrow from a payday loan?
The amount you may borrow varies depending on your financial position and the laws of your state. Most states with payday lending restrictions set the maximum loan amount between $300 and $1,000.
This does not guarantee you will receive the maximum amount permitted by law. Your income may be taken into account by a payday lender when determining the maximum loan amount.
Payday lenders should take into account your existing debts and your ability to repay when determining your maximum loan amount. This is to avoid putting you at risk of getting caught in a debt spiral. Many lenders won’t do this, though, so you need to look out for yourself and consider carefully what you can afford before you apply.
Check your state’s maximum lending amount in the table below
|State||Max Interest Rate*||Max Loan Amount|
|Nevada||652 %||25% of monthly income|
|New Hampshire||36 %||$500|
|North Dakota||520 %||$600|
|Rhode Island||261 %||$500|
|South Carolina||391 %||$550|
|South Dakota||36 %||$500|
Many states have introduced a regulation for maximum loan amounts for payday loans.
How much does a payday loan cost?
The fees and costs for payday loans vary by state and lender. The price is often a flat rate of $10 to $30 for each $100 borrowed, while the Consumer Financial Protection Bureau reports that it’s common to see lenders levy a $15 fee for each $100 borrowed.
Most likely, you won’t be charged for this upfront. The APR, which includes the interest rate and additional costs, is frequently used to display the terms of payday loans.
Payday loans sometimes carry excessive APRs because of the extremely short term they cover. We have explained APR more in detail in other articles, which discuss what APR is and why it is so high for payday loans.
If the loan is not fully paid back on the initial payday, a charge is imposed, and the cycle is repeated. Borrowers may find themselves paying more in interest than that of the original loan balance within a few weeks. Because of this, payday loans are risky, making it simple to fall into a debt cycle and expensive to escape.
Should I take out a payday loan?
Payday loans are rarely a wise decision because of their high-interest rates and costs. Consider your choices carefully before taking out a payday loan because the interest rates on these loans are so high, and borrowers frequently struggle to repay them and end up in deeper debt.
A payday loan, however, can make sense if you have an immediate financial need and know you will be able to repay the amount with your next paycheck.
You might also want to consider these loans if you don’t have any other financial options and can’t get a regular loan because of bad credit.
A payday loan might be your wisest and only alternative if you have no other way to get money and you must have cash for an emergency. However, you should enter the deal knowing how risky it is for your finances and with your eyes wide open.
Payday loans shouldn’t cover things that aren’t genuine emergencies. For instance, it can make sense to get a payday loan if you need to pay for a car repair since you have to have a car or you risk losing your job.
- Payday loan laws vary from state to state, placing restrictions on the amount you can borrow and the amount of interest and fees the lender can charge. Payday loans are banned in several states.
- According to the CFPB, the average two-week payday loan is $350. Most payday loans fall between $50 to $1,000.
- Payday loan rates range from $10 to $30 per $100 borrowed and are regulated by state regulations. Typically, a $100 payday loan will cost $15 for two weeks.
- A payday loan is often repaid in one lump sum by your next paycheck.
- A payday loan might help someone in immediate need. However, since these loans typically have a significant APR, you risk being stuck in a debt cycle if you cannot repay them on time.