Payday Loans in Connecticut: Why They're Void and What to Borrow

No, you can't get a legal payday loan in Connecticut. A loan of $50,000 or less above 12% APR needs a state small loan license, licensed lenders can charge up to 36% a year, and an unlicensed payday loan is void.

Connecticut's 36% Ceiling in Monthly Payments

A small loan license lets a lender charge up to 36% a year. Here is what that means for common loan sizes:

Worked out from Connecticut's 36% cap, not offers from lenders in our network; a lender can charge less, and fees and add-ons count toward the APR.

At 36% a year, a licensed Connecticut lender can't charge anything like a payday fee. Since October 1, 2023, Connecticut works out the APR the way the federal Military Lending Act does, so add-on products, memberships, "voluntary" tips and any other fee tied to the loan count toward it.

What Happens to an Illegal Payday Loan in Connecticut

• It's void. A small loan from a lender that is neither licensed nor exempt can't be enforced: no one has the right to collect the principal, interest or fees.
• Collectors can't chase it. In 2022, DOB ordered a licensed collection agency to refund about $44,000 to 103 residents for collecting on such loans.
• Tribal ties don't change it. DOB says tribal immunity doesn't cover collection agencies and others working for tribal lenders.
• Online counts. The license rule covers loans made by mail, phone, internet or any electronic means.

If an online lender is collecting on a payday loan, file a complaint with DOB, or call the Attorney General's Finance Department at 860-808-5270.

Cash Advance Apps, Tips and Memberships

Connecticut's definition of a small loan includes advances on future pay, salary, pension income or a tax refund. DOB says earned wage access advances, lawsuit settlement advances and similar products are generally covered when the amount is $50,000 or less and the APR, counting every fee, membership and tip, tops 12%.

• A company offering that kind of advance needs a Connecticut small loan license, unless it's exempt.
• A "voluntary" tip or a monthly membership counts in the APR, so a small advance with a tip can cross 12% quickly.
• Ask for the APR in writing before you accept any advance.

Car Title Loans, Banks and Loans Over $50,000

• A small loan secured by a car title is capped at the car-sale rates: 15% APR on a new car, 17% on a used car under 2 years old and 19% on older cars.
• Banks and credit unions are exempt from the small loan license. Since October 2023, though, a company that partners with a bank and holds the main economic interest in the loan has to be licensed.
• Loans over $50,000 fall outside the small loan law, though Connecticut's general usury rules may still apply.
• Active-duty servicemembers and their dependents also have the federal 36% Military APR limit.

Getting Matched With a Licensed Connecticut Lender

1. Have your ID, proof of income and bank account details ready, and decide how much you need and over how many months.
2. Submit one request through LendUp. Lenders in our network review it, and any offer shows the APR, payments and total cost before you sign.
3. Check that the APR, with every fee and add-on, is no more than 36%, and that the lender holds a Connecticut small loan license or is a bank.

Search NMLS for a Connecticut Small Loan License

1. Search NMLS Consumer Access by the company's legal name or NMLS number.
2. Look for an active Connecticut Small Loan Company license.
3. Or download DOB's list of licensed small loan companies and match the name and address to your offer.

Questions or complaints: call DOB at 860-240-8170 or toll-free at 1-800-831-7225 (option 2), or email [email protected]. DOB also takes complaints about unlicensed lenders.

Common Questions

Official Sources

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