Most states require online lenders to be licensed in their state. Four states, however, allow lenders to be licensed in any state. In these four states, loan transactions would follow the laws of the state the lender is licensed out of, not the laws of state in which the borrower resides. An online lender based in a state with no finance charge limits could charge more than the maximum finance charge set by the borrower’s state law and still be operating legally.
Thirteen states prohibit payday loans. Four states, however, allow payday lenders to operate as credit service organizations (CSO) or handle transactions as consumer installment loans. It’s possible for a state to prohibit “payday loans” but make de facto payday loans available through a CSO or other arrangement. It is also possible for a lender licensed as a CSO to charge more than the state maximum for payday loans.
Types of Loans
Online payday lender acts as a Credit Access Business and services your loan through an affiliated short-term lender.
Consumer Installment Loan:
See Installment Loan below.
Online payday lender acts as a Credit Service Organization and services your loan through an affiliated short-term lender.
A medium term loan that is repaid gradually in installments over four or five months.
A medium-term loan where payments are made on each payday for six months.
Borrower is given a Line of Credit and can borrow as much or as often as they want up to their credit limit with numerous repayment options incl. full repayment or minimum payments over time.
Always Verify Licensing
If you’d like to check an online lender’s licensing or transaction type (payday loan, CSO, etc.), visit the payday loan site. Reputable payday lenders will disclose complete licensing and transaction information. If a loan site doesn’t list any info about state licensing , it may be an offshore lender, a matching service “middleman” or a rogue website run by criminals.
State licensed lenders are more likely to adhere to state and federal laws regulating loan financing terms, debt collection practices, privacy protection, etc.
Generally speaking, tribal lending entities are not regulated by state laws.
Payday loan laws and licensing regulations change often. We cannot guarantee the accuracy or suitability of information. Be sure to read the disclaimer at the bottom of our About page.
This is not an exhaustive list and a listing is not a recommendation. Licensed lenders with complaints and/or low user ratings have been removed.
Canada resident? See Provincially Licensed Canadian Payday Loan Sites by Province.