Payday Loans are Legal in California

Beware of predatory lending

Payday Lenders in California

Payday loans are short-term lending arrangements designed to give borrowers quick and easy access to cash when they encounter unexpected expenses or emergencies. Payday loans have become a popular option with Californians taking out an estimated 12 million loans totaling over $4 billion each year. These are designed to be paid back within several weeks – usually when their next paycheck arrives. Although payday loans can provide quick access to funds, they also come with high-interest rates and fees.

In California, the average payday loan is $250, with an average APR of 372%. These high-interest rates can quickly accumulate, making it challenging to repay the loan on time.

Payday loans in California carry significant risks, such as high-interest rates and fees, potential credit score damage, and falling into a cycle of debt. Additionally, borrowers should only take out payday loans for emergencies and unexpected expenses and not as a long-term solution to financial problems. By using payday loans responsibly, borrowers can receive the funds they need without putting their financial future at risk.

Payday Loan Laws

Payday loans are governed by the California Deferred Deposit Transaction Law, which sets maximum loan amounts and interest rate caps. Lenders must provide clear and transparent information about loan terms and fees to borrowers. Additionally, repayment plans must be offered if payment terms cannot be met on time. Furthermore, California law prohibits certain predatory lending practices such as rolling over loans or charging excessive fees.

The State of California has several other pieces of legislation surrounding payday loans:

Loan Terms and Conditions

Maximum loan amount: $300 ($255 when combined with finance charge)

Maximum Interest Rate: 460%

Minimum loan term: No minimum

Maximum loan term: 31 days

Number of rollovers allowed: No rollovers allowed

Finance charges: 15% fee up to $45

Legal action: 4 Years

Certified Payday Lenders in California

Company Name	Company score	License Status
CURO Intermediate Holdings	8	valid
Populus Financial Group, Inc.	7.8	valid
CNG Financial Corporation	7.1	valid
Enova International, Inc.	6.7	valid
Bliksum, LLC	6	valid
Community Choice Financial, Inc..	5.8	valid

History of California Payday Loans

Payday loans have been an increasingly common source of credit in California since their legal authorization under the Deferred Deposit Transaction Law in the late 90s. At first, payday lenders were not subject to any interest rate or fee caps resulting in widespread abuse by payday lenders and trapping borrowers in an endless cycle of debt. In response, state lawmakers implemented several reforms, including capping loan amounts and interest rates. In 2018, California State Assembly members passed the California Financing Law, which expanded state oversight while increasing protections for borrowers.

State Resources

How to file a complaint

The Department of Financial Protection and Innovation (DFPI) regulates payday lenders in California and provides an online brochure about payday lending. To check the license status or history of disciplinary actions against a payday lender, or to file a complaint, you can contact the DFPI. Complaints can be submitted online or by mail.

California Payday Loans Debt Relief

How to Get out of Payday Loan Debt?

If possible, it’s best to steer clear of payday loans altogether. These loans can quickly turn a short-term need into a never-ending cycle of debt. Finding a way to balance repayment of payday loans with living expenses can be challenging, leading to repeated borrowing and more debt. Although this is difficult for California borrowers, there are ways they can escape payday loan debt. Borrowers should reach out to their lender and try to negotiate a repayment plan, such as reducing amounts owed or extending payment periods. Refinancing with lower-rate loans may also be considered. Bankruptcy should only ever be pursued as an absolute last resort and discussed with legal counsel prior to filing for it.

Support Resources

Types of Quick Loans in California

Title Loans Title loans allow borrowers to use their vehicle as collateral for the loan and typically receive a percentage of its value as cash from lenders. It must be repaid with interest and fees, usually within 30 days - otherwise, lenders can repossess and sell it to recover the remaining loan balance. Title loans often have very high-interest rates and fees, and the risk of losing the vehicle can have serious financial consequences.

Installment Loans Installment loans offer borrowers access to lump sums of money that must be repaid back in installments over time. In California, installment loans tend to offer longer payment terms and lower interest rates than payday loans, making them a more affordable solution when larger sums of money are needed. They may be secured or unsecured loans, with some lenders offering flexible repayment options such as early repayment without penalty and flexible payment dates or amounts; it's important to review the terms and fees of installment loans carefully to understand what can be repaid on time.

Line of Credit Loans California line of credit loans provide borrowers with a revolving line of credit that they can draw upon as needed, up to a predetermined limit. Borrowers can withdraw funds when needed while only incurring interest charges on what is withdrawn; depending on the lender and a borrower's creditworthiness, they may either be secured or unsecured, making them an attractive solution when needing access to cash without being forced into borrowing a lump sum or paying interest on the full amount upfront.

Alternatives to Payday Loans in California

Personal Loans

Personal loans are a type of loan that provides borrowers with funds for a wide range of purposes, such as debt consolidation, home improvements, or unexpected expenses. In California, personal loans are typically unsecured, meaning they are not backed by collateral and are based on the borrower's credit history. Interest rates on personal loans can vary based on several factors, including the borrower's credit score, income, and other factors. The repayment terms of personal loans in California can range from several months to several years. Personal loans can be obtained from banks, credit unions, online lenders, and other financial institutions. It is important to compare rates and fees when applying for personal loans to ensure that the loan is affordable and fits within the borrower's budget.

Land Loans

Construction loans can be used to fund the building of a home or commercial property. Generally, these short-term loans cover materials, labor costs and other expenses associated with construction. Loan terms and conditions differ between lenders but typically require at least 20% down payment as an upfront cost. Borrowers must demonstrate good credit and their ability to repay the loan on time.

Construction Loans

Bad Credit Loans in California

Bad credit loans in California are designed for borrowers with poor credit scores or limited credit histories. These loans may have higher interest rates and fees than traditional loans because lenders take on more risk, and the amount borrowed may also be lower. Bad credit loans may be secured or unsecured, with secured loans requiring collateral, such as a vehicle or savings account. It's crucial for borrowers with bad credit to compare terms and fees before borrowing, as costs can be much higher than traditional loans.

California Small Business Loans

California provides several types of small business loans with different requirements and terms:

SBA loans: Loans that are backed by the U.S. Small Business Administration, which offer lower interest rates and longer repayment terms than conventional loans.
Business lines of credit: A revolving line of credit that gives businesses access to funds they need it. They have flexible repayment terms.
Equipment loans: Loans used to purchase or lease equipment required for running the business, with the equipment itself serving as collateral.
Invoice financing: A type of financing that gives businesses an opportunity to receive cash advances on unpaid invoices. The invoices serve as collateral.
Microloans:Small loans provided by nonprofit organizations or community lenders to help small businesses get started or expand.

VA loans in California

VA loans in California are available to veterans and active-duty military members and are designed to help them purchase a home with little to no down payment. These loans are backed by the U.S. Department of Veterans Affairs, and offer several advantages over traditional loans, including lower interest rates and no private mortgage insurance requirement. Additionally, VA loans have more flexible qualification requirements, making them an attractive option for those who may have difficulty meeting traditional loan criteria. To be eligible for a VA loan, borrowers must meet certain service requirements and have a Certificate of Eligibility.

California Student Loans

Many options are available to California students to help finance their college education. These options include:

Federal Student Loans: Loans provided by the federal government offering low-interest rates and flexible repayment plans.
California Student Aid Commission (CSAC) loans: Provided by the California government to eligible students attending California colleges or universities.
Cal Grant: A state-funded grant program that provides financial aid to eligible California residents attending college.
Private Student Loans: Loans from private lenders, they commonly have higher interest rates and may require a co-signer.

California Income Information

According to the 2021 U.S. Census, California had a median household income of $84,097, slightly higher than the national median of $70,717. The economy in California is one of the largest and most diverse in the world, with major industries including technology, entertainment, agriculture, and healthcare. The poverty percentage in California in 2021 was 12.3%. Median household income and poverty levels vary significantly by county in California, with Santa Clara County having the highest median income at $93,854, and Lake County having the lowest at $35,997.

United States Census Bureau. “Poverty in the United States: 2021.” Accessed on April 18, 2023.
United States Census Bureau. U.S. Census Bureau QuickFacts: California. Accessed on April 18, 2023.

California Payday Lender Complaints

Below are trends associated with the top payday lenders in California, as reported to the Consumer Financial Protection Bureau.

Company Name	Count
CURO Intermediate Holdings	70
Populus Financial Group, Inc. (F/K/A Ace Cash Express)	33
CNG Financial Corporation	27
Enova International, Inc.	27
Bliksum, LLC	26
Community Choice Financial, Inc..	25
Total Complaints	700

Consumer Financial Protection Bureau. Consumer Complaint Database. Accessed on April 18, 2023.

Most Common Issues

Complaint type	Count
Charged unexpected interest or fees	170
Struggling to pay loan	117
Received a loan didn’t apply for	98
Unable to contact lender	53
Problems with process at end of loan	53

What are the main reasons residents of California apply for payday cash advance online or offline

Payday loans are typically used for nonnegotiable everyday expenses like your rent, utilities, and groceries. Per data reported by Pewtrust, the percentage of reasons described below

Reason	Share
Regular Expenses (Utilities, car payment)	53%
Unexpected emergency/expense	16%
Rent/Mortgage	10%
Something Special	8%
Other	5%
Did not answer	2%

Payday Lenders by City

Los Angeles
San Diego
San Jose
San Francisco
Fresno
Sacramento
Long Beach
Oakland
Bakersfield
Anaheim

Stockton
Riverside
Santa Ana
Irvine
Chula Vista
Fremont
Santa Clarita
San Bernardino
Modesto
Moreno Valley

Fontana
Oxnard
Huntington Beach
Glendale
Santa Rosa
Elk Grove
Ontario
Oceanside
Rancho Cucamonga
Garden Grove

Frequently Asked Questions

Will applying for a payday loan impact my credit?

Payday loans are typically not reported to the three major credit reporting agencies, and most lenders do not conduct credit checks as part of their application process.

What do I need to apply for a payday loan?

To apply for a payday loan in California, you will typically need to provide your identification, proof of income, bank account information, and contact information.

Can I cancel my payday loan?

Borrowers in California have the right to cancel their payday loan within one business day of the transaction without incurring any additional fees or penalties. To cancel the loan, borrowers must inform the lender in writing and return the loan amount by the end of the business day.

Can a payday loan lender garnish my wages?

No, payday lenders in California cannot garnish wages.

Can spouses have separate loans?

Yes, spouses can have separate payday loans in California as long as they individually meet the lender’s eligibility requirements and can provide the necessary documentation and information to apply.

When will I receive my funds if I am approved for a payday loan?

Funds are typically received on the same day or the next business day after loan approval, and can be disbursed through various methods, such as direct deposit or a prepaid debit card.

What happens if I can’t repay my payday loan on time?

You may face additional fees and charges, and the lender may take legal action or send the debt to a collection agency, but it’s important to communicate with the lender and explore all available options.

When could I apply for another payday loan?

In California, you can apply for another payday loan immediately after paying off your existing loan.