What You Need
to Know About
Payday Loans
www.DFPI.ca.gov
• Payday Loan Information
• Fees for Payday Loans
• California Law Protections
• Credit Counseling
• Avoiding Bankruptcy
Contact the California Department of
Financial Protection and Innovation to
check the licensing status, history of
disciplinary actions, or to le a complaint
against a payday lender.
Learn more about payday
loans form the DFPI:
www.DFPI.ca.gov
Toll-Free 1-866-275-2677
TTY 1-800-735-2922
For additional copies of this publication,
please e-mail your request to
State of California
Business, Consumer Services, and Housing Agency
Financial Tips
• Create and follow a monthly, weekly, and daily
budget. Cut out unnecessary expenses.
• Prioritize your debts. Pay o loans or credit cards
with the most expensive interest rates rst.
• Build a “rainy-day” fund by setting aside small
amounts of money per paycheck.
• Contact a local consumer credit counseling
service for help developing a monthly budget or a
debt repayment plan with creditors.
Use Caution with Online Payday Loans!
Verify the license of a lender before sharing
personal information! You can verify a lender’s
license by checking www.dfpi.ca.gov or calling
1-866-275-2677.
Unlicensed lenders may:
• Illegally collect from you without permission, even
if you are unable to repay the loan.
• Charge an interest rate far higher than what
California law allows.
• Sell or pirate your personal nancial information.
• Operate out-of-state or out-of-country, making
it dicult to track them down and recover lost
funds.
• If you wish to le a formal complaint
against an unlicensed lender, visit
https://dfpi.ca.gov/le-a-complaint.
CDDTL 001 (REV 02/21)
California Department of Financial Protection and Innovation | TOLL FREE 1-866-275-2677 | TTY 1-800-735-2922 | www.dfpi.ca.gov
What is a Payday Loan?
A payday loan is a short-term, high-cost loan. A
borrower will write a post-dated check for the full
amount of the loan and repay it or have the funds
deducted from their account on their next payday,
up to 31 days later. For example, a borrower writes
a $300 check, pays a $45 fee, and receives $255
in cash.
If You Take Out a Payday Loan:
Borrow only as much as you can pay back in full on
your next payday and consider other unexpected
expenses or alternate forms of credit. If you cannot
aord to pay back the loan on the due date, do not
take out a second payday loan to cover the cost.
Doing so can lead to a cycle of debt which will be
dicult to recover from and expensive.
Fees for Payday Loans:
Under California law, the maximum amount a
consumer can borrow in a payday loan is $300.
The maximum fee a payday lender can charge is
15% of the amount of the check (up to a maximum
of $45). Additional fee restrictions apply for military
servicemembers and their dependents.
A 15% fee is equivalent to an annual percentage
rate (APR) of 460% for a two-week loan. By
comparison, a loan for a new car generally has an
APR between 4% and 7%. APR is the total annual
interest and any additional costs or fees that a
borrower pays on a loan. APR is used to reveal the
total cost of borrowing money.
Loans to Military Members and their
Dependents:
Because of recent changes in federal and
California law that restrict payday loan fees for
military servicemembers and their dependents,
some payday lenders may choose not to make
loans to servicemembers and their dependents.
How California Laws Protect You:
• To do business in California, all payday lenders –
whether a storefront or online - must be licensed
by the Department of Financial Protection and
Innovation (DFPI). Visit the department’s website
(www.dfpi.ca.gov) to verify a lender’s license.
• A payday lender may make only one loan at
a time to a consumer 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 servicemembers.
• Payday lenders must post their California license
and a fee schedule at every location.
• A payday lender cannot make a new loan to pay
o an existing loan.
• A payday lender cannot issue a new loan while
a borrower still has an existing loan, 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 aware: your bank may charge you additional
fees for insucient 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.
• The contract for a payday loan must be provided
to you in your primary language.
• A payday lender cannot threaten to prosecute
you in criminal court to recover insucient funds.
• You may have other legal protections under
California law. If you need help or suspect
violations of the law, please contact the DFPI.
If You Have Credit Problems:
Call your creditors and ask them to waive late fees,
reduce interest rates, or work with you to establish
a repayment schedule that you can manage.
If you miss bill payments or have other credit
troubles, you may benet from the services of a
nancial counselor who can review your nancial
situation and help develop a personalized money
management plan. Be aware: just because a debt
management agency claims to be “non-prot”
does not guarantee the services are legitimate or
aordable.
A reputable debt management agency should
provide free information without requiring your
personal details. Avoid organizations that push a
debt management plan as your only option before
they analyze your nancial situation.
Visit the National Foundation for Credit Counseling
(NFCC) website (www.nfcc.org) or call toll free
1-800-388-2227 for assistance with credit problems
and creditors.
If You Are Facing Bankruptcy:
Federal law requires mandatory credit counseling
before you can declare bankruptcy. For help and
information about credit counseling, see the FTC’s
publication, Filing for Bankruptcy: What to Know
(http://dfpi.us/bankruptcywhattoknow).
The U.S. Department of Justice Trustee Program
approves organizations to provide mandatory
counseling before you can declare bankruptcy
and mandatory debtor education after you declare
bankruptcy.
To nd an approved organization near you, see the
DOJ’s List of Approved Providers of Personal
Financial Management Instructional Courses
(http://dfpi.us/bankruptcycounseling).
