What a payday loan costs — before Alabama’s rules
A payday loan typically costs $15–$20 per $100 borrowed for a two-week term — roughly 400% APR — and is due as a single lump sum on your next payday. That single-payment structure, not the fee on any one loan, is the trap: most fees come from borrowers who cannot clear the balance in one go and roll it over. Where a state caps rates below payday levels, licensed payday lending disappears and a loan above the cap is generally void — not legally collectible, whatever the contract says.
The law in Alabama
- Rate cap
- No effective APR cap on tribal loans. Storefront payday is allowed at 17.5% per $100 (~456% APR) under the Deferred Presentment Services Act (2003).
- Key law
- Alabama Deferred Presentment Services Act, 2003 (Ala. Code § 5-18A) — tribal loans fall outside it.
- Enforcement
- No major state action verified. The Alabama State Banking Department issued a 2019 consumer alert conceding tribal lenders "may not be subject to" its jurisdiction.
Big Picture Loans, an Alabama-active tribal lender, has charged APRs reported as high as 699%.
What it means for a Alabama borrower
The Banking Department itself concedes tribal lenders likely fall outside state jurisdiction, so tribal loans are effectively tolerated and generally treated as enforceable. Big Picture Loans openly serves Alabama at APRs reported near 699%.
Before you borrow in Alabama
- File a complaint with the Alabama State Banking Department, Bureau of Loans.
- Consult a consumer attorney — state fee caps do not clearly void a tribal loan here.
Cheaper first — try these before a payday loan in Alabama
Payday Loans and tribal lenders in Alabama
Many online lenders that market payday loans to Alabama residents are tribal lenders arguing their sovereignty places them outside state rate caps — a separate legal question this site tracks in depth. For which tribal brands lend to Alabama residents and how state law applies to them, see the Alabama tribal-lending page.
Tribal loans in Alabama →Frequently asked questions
Are payday loans legal in Alabama?
In Alabama, payday-style loans are legal and enforceable, commonly at around 400% APR. The speed is real; so is the cost and the rollover trap. Compare the total dollars repaid before you borrow, and try a credit-union alternative first.
What is the maximum payday loan rate in Alabama?
No effective APR cap on tribal loans. Storefront payday is allowed at 17.5% per $100 (~456% APR) under the Deferred Presentment Services Act (2003).
What can I do about a payday loan I already have in Alabama?
Alabama allows this lending, so the loan is generally enforceable — but you can still revoke ACH authorization in writing, avoid taking a second loan to cover the first, and file a complaint with the Alabama attorney general or the CFPB if the lender breaks the rules.