5 Highest Payday Loan Rates by State

Payday Loans lit up on neon green arrowWhen you are in need of cash for unexpected life expenses, a payday loan can seem like an attractive option. However, these types of micro-lending products should be used with extreme caution, as the financing costs can be exorbitant and the terms can become complex quickly. If you are considering taking out a payday loan for unexpected bills, there are a number of aspects that should be taken into account before proceeding. The most important is the interest rate associated with borrowing through a payday lender.

Because payday loans have short repayment terms – typically between 14 and 30 days – the cost of financing can quickly get out of control. Recently, some states have adopted legal guidelines that mandate the maximum amount of interest that can be charged on a payday loan while others either do not allow them within the state or have no cap on what can be charged for financing. Here are the top five most expensive states in which you could take out a payday loan.

Idaho

Payday loan lenders within the state of Idaho are allowed to charge as much as they deem appropriate to borrowers, as no state maximum has been set. Borrowers within Idaho are charged, on average 582% annual interest on a payday loan, and the maximum amount allowed for any one transaction is $1,000.

South Dakota

Payday loan lenders within the state of South Dakota also do not have a state mandated cap on interest charged for these micro-lending products. On average, borrowers pay 574% for a payday loan, with a maximum borrowed amount capped at $500.

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Wisconsin

Lenders within the state of Wisconsin also do not have a state mandated maximum cap on interest rates charged to payday loan borrowers. On average, 574% is charged to those who take out a payday loan, with no established maximum set for the amount that can be borrowed.

Nevada

Another state with no mandated interest rate maximum for payday loans is Nevada, charging customers, on average, 521% on borrowed amounts. The state does, however, impose a maximum amount borrowed that cannot exceed 25% of the expected gross monthly income of the borrower.

Delaware

Within the state of Delaware, there is no state mandated maximum as it relates to payday loan interest rates. On average, customers pay 517% interest on the amount borrowed, up to a maximum amount of $1,000 per transaction.

For more information about payday loan interest rate charges and state guidelines for lenders, please visit the NCSL web site.

Posted on November 14, 2014 by in Personal Loans

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