Are Payday Loans Legal in PA State?


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Payday loans are a widely used financing option for individuals. They are generally used to meet the small shortfall in the cash until the next payday. That is the reason they are known as payday loans. These loans are subject to state and federal regulations.

The loans are available to customers in most of the states in the US. However, most the states have put stiff regulations regarding the loans. These restrictions are put in place to protect the interests of the consumers in paying an exorbitant sum of the loan. Some of the states charge low rates in the range of 24 to 48 percent. However, there are some states that ban the loans altogether. Here we will take a look at rules regarding payday loans in the state of Pennsylvania.

Legal Laws relating to Payday Loans in Pennsylvania

The state of Pennsylvania has specifically prohibited payday loan according to 63 Penn Stat. Ann. § 2325 and 7 Pa. Cons. Stat. §§ 6201 et seq.

The State of Pennsylvania passed a law in 1998 that prohibited check-cashing companies from issuing loans to the customers based on post-dated checks. Most of the payday loan lenders in the US require borrowers to make payment in this way.

The consumer writes a post-dated check that is cashed in by the lender when it becomes due. As a result, the direct payday loan lending is not carried on in the state. In recent years, the pressure to change the rules regarding payday and small loans has increased in the state. A number of bills were put forward to legalize payday loans in Pennsylvania. At the moment, at least, the lenders are prohibited from giving payday loans to the consumers.


Payday loans are prohibited in the state of Pennsylvania. However, lenders are allowed to offer small loans to the consumers. Consumers in the state can obtain short-term loans to meet their important expenses.

Nevertheless, Pennsylvania state legislators have put strict restrictions on small payday loan lenders as well. The state has put up a cap of 6 percent on small loans. No small lender operating in the state can legally charge more than the maximum rates by the state. The lenders cannot charge more than $9.50 per $100 interest per year. Moreover, they can charge a maximum of $1.50 per $100 annual service charge to the borrowers. Small loan lenders can issue loans up to 24 percent but they have to obtain a license from the state first.