Payday Loans in Pennsylvania: What's Legal When You Need Cash

Not at payday prices. In Pennsylvania a non-bank lender needs a Consumer Discount Company license to charge over 6% a year on loans of $25,000 or less, and even then the cap is 2% a month on what you owe.

Pennsylvania Loan Costs at the Consumer Discount Company Caps

Worked out at 2% a month (24% a year) on the unpaid balance, not offers from lenders in our network; a lender can charge less.

The other pricing a licensee may use is $9.50 per $100 for each year of the term ($6 per $100 past 48 months), plus a service charge of $1.50 per $50, which is $30 on a $1,000 loan and $150 at most. It can cost more on small, short loans, so compare APRs.

These caps bind licensed consumer discount companies, and one licensee can't lend you more than $25,000 in total. The act doesn't apply to banks, building and loan associations or credit unions, which lend under their own laws.

Payday Lenders, Check Cashers and Pennsylvania's 6% Rule

Pennsylvania's usury law caps interest at 6% a year on loans of $50,000 or less unless another law allows more. For non-bank loans of $25,000 or less, that law is the Consumer Discount Company Act, and anyone making or negotiating them above 6%, as lender, agent or broker, needs its license.

• A fee of $15 per $100 for two weeks works out to about 391% a year, far beyond 2% a month.
• Licensed check cashers can't cash or advance money on a postdated personal check, the way payday loans work in other states.
• Soliciting borrowers for these loans, or offering to arrange them, counts as being in the business too.

Looking for a Direct Lender in Pennsylvania?

For a small cash loan, the direct lender is a licensed consumer discount company, a business corporation that makes non-mortgage loans, or a bank or credit union. Companies in between have their own rules:

• Loan brokers register with DoBS. A company paid to arrange a loan or help you get one must be registered as a loan broker.
• No advance fees. A loan broker can't charge you a fee in advance. Doing so is a third-degree felony under the Credit Services Act.
• Referral fees don't go on your loan. A company that charges you for a referral is treated as being in the lending business, and a licensee can't add a referral fee to your loan.
• No fee if there's no loan. A licensee can't charge for investigating your application, or anything else, if the loan isn't made.

Late Payments, Early Payoff and Refinancing in Pennsylvania

• Late charges: 1.5% a month on the amount past due ($1 minimum) on add-on loans; on 2%-a-month loans, the higher of $20 or 10% of a payment more than 15 days late.
• Installment loans are repaid in substantially equal payments, and you can pay off part or all of the loan early. Pay an add-on loan off in full and the lender must refund part of the interest.
• Refinancing earns you a refund of unearned interest on the old loan, and within four months the service charge applies only to new money.

Applying for a Pennsylvania Cash Loan

1. Have your ID, proof of income and bank account details ready, and decide how many months you need. At the 2%-a-month cap, $1,000 over 12 months is about $94.56 a month.
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. Before you sign, find the lender in the PA Financial Institutions Search as a consumer discount company, or confirm it's a bank or credit union.

Look Up a Consumer Discount Company Before You Sign

1. Open DoBS's PA Financial Institutions Search and enter the company's legal name.
2. Look for an active Consumer Discount Company license, or a Credit Services Loan Broker registration if it only arranges loans.
3. Match the name and address to your loan documents.

Call DoBS at 1-800-PA-BANKS (722-2657) with questions, or file a complaint through the DoBS Portal.

Common Questions

Official Sources

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