Payday Loans In California

Payday loans are one of the most promoted financial services online. The loans are considered ‘cash loans’ that allow individuals to meet their short term financial needs. Individuals who face financial problems can get quick relief by applying for a payday loan. The loan is the best option for individuals that face unexpected and unpleasant financial problems. It allows individuals to stretch their budget until they receive their next pay check.

The short term loans are the most convenient option for individuals because it does not require them to wait long obtain the loan. The loan application process involves minimum input from the individual. Individuals who are found eligible can receive the loan amount within two to three working days of filling out the application.

Every state has different rules and regulations regarding payday loans. Individuals should know about these rules to know their rights when making the loan application. Below we will take a look at the payday loan rules in the state of California.

Pay Day Loan Rules in California (CA): A Brief Overview

Payday loan laws in California are covered by Civil Code 1789.30 et seq. and Financial Code 23000 et seq. These laws prescribe the rules and regulations regarding loan limit, fees, charges, and other aspects of the short term cash loan.

All payday lenders need to get a license from the state Department of Business Oversight. The license is required by both online and storefront lenders. This is a mandatory requirement without which payday loan lenders cannot legally operate in the state.

Payday loan lenders are also required to post license status and fee schedule at visible places. The purpose of the regulation is to ensure maximum transparency regarding the payday loan.

State allows payday lenders to take only one loan at a time that does not exceed $300. Payday loan lenders are not allowed to issue a new loan to pay off the existing loan. They cannot issue the new loan even if the new and existing loan amount is less than $300. In addition, the lenders can charge a maximum of 15% fee on the loan amount. The law prescribes additional free restrictions when the loan is given to military personnel.


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A lender is allowed to charge only one fee for bounced check. The maximum amount of the bounced check fee cannot exceed $15. However, this fee is other than the amount charged by the borrower’s bank for having insufficient funds in the account.

The payday loan lender cannot charge any additional fee if the borrower requires to extension of payment plan or time. That being said, lenders are not bound to accept such requests made by the clients.

Final Remarks!

Californian state law does not allow lenders to threaten the borrowers in case of a default. They also cannot prosecute the borrowers of nonpayment of the loan amount.  Individuals who want to know more information about their legal laws regarding payday loans in California should contact Department of Business Oversight.