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Payday loans are not available in every US state and in some states payday loans are completely illegal. In order to know whether or not you can borrow money now, it is important that you understand the rules of your state. Read on to find out whether you can access loans, and how to do so, from other states.

How Do US Payday Loans Vary Between States?

If you are considering taking out a payday loan it is important that you know whether or not payday loans are legal in your state. Although there are some exceptions, generally speaking you cannot get a payday loan from another state in the USA.

Currently, there are 10 states (plus the District of Columbia) which prohibit payday loans. Across the other 40 states payday loans are subject to unique regulations as decided by each state. There is a range of variability between the interest rates across states as well as specific rules and laws around things like additional fees and charges.

Some states have also issued a price cap. Generally speaking, there is a higher concentration of payday lenders in states where restrictions are less strict and therefore, getting an instant payday loan in Texas for example, may be somewhat easier and more straightforward than finding quick loans in Florida from a payday lender, as there are more payday stores in Texas.

Are Payday Loans Legal In My State?

Although payday loans are legalized in the majority of US states, there are regulations across certain states including price caps on interest rates. Payday loans are illegal in Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, West Virginia and the District of Columbia.

Is It Possible to Receive a Payday Loan From Another State?

The answer to this question is entirely dependent on your situation. You may be able to receive a loan from a state in which you have temporary residency but have no permanent residence.

In order to qualify for a payday loan from another state, you will probably need proof of address and not all lenders will be willing to take on your case.

If you are living in one state, you cannot take out a payday loan in a bordering state, even if payday lending is legal in both states.

This is because of the different regulations from state to state. Lenders can only provide loans to people in states where they have a valid license. This should also be taken into consideration when you apply for a payday loan online.

Therefore, being able to receive a payday loan from another state is not as straightforward as you might expect and is generally something to avoid.

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When you need a payday loan, generally speaking, you will not be able to borrow money from another state other than the one you live in.

What Happens If I Get a Payday Loan In a State Where It Is Illegal?

You should always make sure that a payday loan is legal in your state before you take it out.

You should check interest rates and fees, as well as loan amounts, to make sure that they are in keeping with your state’s regulations. If you find out that the payday loan you have been given is illegal, you may not need to pay it back.

If you have borrowed money in a state where payday lending is illegal, you should always take care to ensure you haven’t fallen into a debt trap and into the hands of a loan shark, who may cause you more problems and further debt.

Some states require you to pay back the agreed amount (including interest). In other states you only need to repay the principal.

If you take out a payday loan and then move into a state where payday loans are prohibited, you will still need to pay back your loan.

How Do I Know If a Payday Lender Is Reputable?

You should always ensure that you are getting a payday loan from a licensed lender in the USA. To check that this is the case you can ask to see a state-issued license.

This is usually readily available either on the website or as a physical copy, if you are in a payday loan store. If you are still not convinced, you can also verify the license with a financial regulations office or with the state attorney general.

Are There Alternatives to a Payday Loan?

If payday loans are prohibited in your state this does not mean you cannot borrow money, even if you just need to borrow $500 or a small loan amount.  There are many other solutions available for short-term borrowing in the USA. For example:

Personal Loans: A personal loan is a form of credit that can help with big payments or to consolidate debt. Personal loans tend to have a lower rate of interest on credit cards. For this reason, personal loans are often used to consolidate credit card debt into more manageable monthly payments.

Installment Loans: Installment loans or another type of short term loan which can help cover payments that occurred between paychecks. Installment loans are a good alternative to payday loans, as they often provide a bit more flexibility as you often have longer to pay them back.

Credit Counseling: If you’re experiencing mountain debt and find yourself in financial difficulty, credit counseling may be a good option. Through credit counseling you can develop a realistic budget and receive guidance to build savings.

Tribal Lenders: Native American tribes, or payday lenders collaborating with tribes, can offer payday lending in states where these types of loans may otherwise be illegal. Tribal lenders are generally considered to be a safe option however they can sometimes have very high interest rates so make sure you know what you’re getting into.

Overall, it is important to consider all avenues before borrowing a loan and to check whether they are legal in the state you currently live in. In addition, if you’re experiencing severe debt then it is strongly advised to consider alternative financial options before borrowing a loan.