Payday Loans in Vermont: What Licensed Lenders Can Charge Instead

Not at payday prices. Vermont caps a single-payment loan from a state-regulated lender at 18% a year, so $500 for 14 days could cost no more than $3.45. Licensed lenders' loans are repaid in equal monthly installments, at up to 24% a year on the first $1,000.

Vermont's 24%, 12% and 18% Ceilings on Real Loan Amounts

Worked out monthly from Vermont law, not offers from lenders in our network; a lender can charge less.

Installment lenders may charge 24% a year on the first $1,000 of the balance and 12% above, or 18% on all of it if that's higher; each row uses the higher. Loans secured by a vehicle, boat or mobile home are capped at 18% for current and previous model years, 20% for older.

Licensed lenders can't add other fees beyond public filing fees and credit life or disability insurance, and interest can't be taken in advance.

Why Payday Lending Doesn't Fit Vermont Law

Vermont's default legal rate is 12% a year. Against that, a $15-per-$100 two-week payday fee works out to about 391% APR.

• Since May 2012, soliciting or making a loan to a Vermont consumer, directly or through an agent, without complying with Vermont's licensed lender law is an unfair and deceptive practice, unless the lender is exempt.
• Loans made by mail, phone or online to Vermont residents are covered wherever they're made; the lender needs a Vermont license, not a Vermont office.
• Payment processors other than federally insured banks can't debit your account for such loans, and knowingly helping the lender is a violation too.
• A company paid to find or arrange a loan for you, or to generate leads, needs a DFR loan solicitation license.

Monthly Installments, Free Prepayment: Vermont's Licensed-Lender Rules

• Equal monthly payments. Licensed lenders' consumer loans are repaid in substantially equal monthly installments.
• Pay early, no penalty. Prepay any amount at any time; the lender may first apply it to interest owed to that day.
• Charges up front. Before closing you get a full schedule of charges, and a statement within 30 days of each payment or yearly.
• No confession of judgment. Nor a note with blanks to fill in after you sign, or two loans at once to raise the rate.

If a Vermont Loan Charges More Than the Law Allows

• A licensed lender's loan with excess charges, unless from a bona fide error, is void: no principal, interest or charges can be collected.
• A loan above Vermont's legal rates can't be enforced in the state. A lender that knowingly contracts above them can collect only half the principal, and you can sue to recover overpaid interest plus attorney's fees.
• In 2020, DFR got 224 Vermonters $191,504 in restitution over 285 unlicensed loans, plus a $25,000 penalty.

Requesting a Vermont-Licensed Loan: Three Steps

1. Decide how much you need and for how many months; at Vermont's caps, $1,000 over 12 months is about $94.56 a month. Have your ID, proof of income and bank details ready.
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, check the rate against the caps above, and that the lender holds a Vermont lender license or is a bank.

Checking a Vermont Lender License Through DFR and NMLS

1. DFR points borrowers to NMLS Consumer Access: search the company's legal name or NMLS ID.
2. Look for an active Vermont Lender license. Each location, in Vermont or not, needs its own.
3. A site that only finds or arranges loans should hold a Vermont Loan Solicitation license instead.

Questions or complaints: DFR Banking Division, 802-828-3307 or [email protected].

• Who's exempt. Banks and other insured depository institutions, pawnbrokers, insurance companies and sellers financing their own goods.
• Military borrowers. Federal law caps most loans to active-duty servicemembers and covered family members at a 36% Military APR.

Common Questions

Official Sources

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