Why Are Payday Loans Banned In Some States?

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Hi! Just to clarify things for me and know for the future: are payday loans legal in general? Why are they banned in some states and are available in other states? Is there a way to take a loan even if you’re from a state where payday loans are banned? Which are these states first of all?
– Jack

The Answer

Why do some states ban payday loans? The reason is that the authorities in these states do not trust lenders to be responsible and transparent. They also do not trust borrowers to know what is best for their own financial needs.

Is it fair? Maybe not, but payday loan fraud has become so pervasive that it is easy to empathize with the decision to take the choice out of consumers’ hands.

States Where Payday Loans are Banned

If you live in any of the following states, you will not be able to apply for a payday loan:

  • Arkansas
  • Connecticut
  • Georgia
  • Maryland
  • Massachusetts
  • New Hampshire
  • New Jersey
  • New York
  • North Carolina
  • Pennsylvania
  • West Virginia

You also cannot get a payday loan in the District of Columbia.


What can you do if you live in one of these states and are unable to apply for a payday loan? At this point, your best bet is to look for a similar loan product which is not illegal in your state. You might, for example, be able to take out a small personal loan instead.

Resist the urge to do business with the company which is not licensed in your state. If that lender is willing to break the law to give you a loan, they may also violate other rules when they try to collect debt.

Reviewed by: Casey Bond
Date Reviewed: Mar 20, 2019

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