What a payday loan costs — before California’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 California
- Rate cap
- Fair Access to Credit Act (AB 539) caps loans of $2,500–$10,000 at 36% plus the federal funds rate (effective Jan 1, 2020). Payday "deferred deposit" loans are separately capped at $300 with a 15% fee.
- Key law
- California Financing Law / Fair Access to Credit Act (AB 539), 2019.
- Enforcement
- The DFPI has issued consent orders (roughly $1M in one case) for Fair Access to Credit Act violations. In People v. Miami Nation Enterprises (2016), the California Supreme Court held tribally affiliated payday lenders were not automatically entitled to sovereign immunity.
In People v. Miami Nation Enterprises (2016), the California Supreme Court refused to extend tribal sovereign immunity to payday-lending businesses — a landmark ruling for state enforcement.
What it means for a California borrower
Loans in the $2,500–$10,000 band above the cap violate state law, and unlicensed or tribal lenders can be sued rather than hiding behind sovereign immunity. Loans above $10,000 have no state rate cap, so some high-cost lending shifts into that range.
If you already have a payday loan in California
A loan that violates California’s rate limits may be partly or fully unenforceable — which changes your options with the lender and any collector. This is general information, not legal advice.
- File a complaint with the California Department of Financial Protection and Innovation (DFPI).
- Check whether the lender holds a California Financing Law license — many tribal lenders do not, and an unlicensed usurious loan may be uncollectable.
Cheaper first — try these before a payday loan in California
Payday Loans and tribal lenders in California
Many online lenders that market payday loans to California 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 California residents and how state law applies to them, see the California tribal-lending page.
Tribal loans in California →Frequently asked questions
Are payday loans legal in California?
In California, payday loans are legal but tightly limited. The state caps loan size, fees or rollovers, so a legal payday loan looks different — and costs less — than the ~400% APR norm, and any lender exceeding those limits is out of compliance.
What is the maximum payday loan rate in California?
Fair Access to Credit Act (AB 539) caps loans of $2,500–$10,000 at 36% plus the federal funds rate (effective Jan 1, 2020). Payday "deferred deposit" loans are separately capped at $300 with a 15% fee.
What can I do about a payday loan I already have in California?
Because California restricts high-cost payday loans, a loan that exceeds the state limit may be partly or fully uncollectible. File a complaint with the California Department of Financial Protection and Innovation (DFPI). This is general information, not legal advice.