What a payday loan costs — before Massachusetts’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 Massachusetts
- Rate cap
- 23% APR cap on small loans (≤$6,000) with a small-loan license (12% without one); traditional payday lending is prohibited.
- Key law
- Massachusetts Small Loan Act; Division of Banks licensing; a 20% criminal-usury statute.
- Enforcement
- AG Maura Healey and the Division of Banks settled with Western Sky, CashCall and Delbert Services, permanently barring them from the state and voiding illegal balances; a separate 2024 "true lender" settlement forced a fintech out of Massachusetts.
The Massachusetts AG permanently barred Western Sky/CashCall from the state; those loans carried APRs up to 355% against a 12%/23% statutory limit.
What it means for a Massachusetts borrower
High-interest payday and tribal loans exceed the 12%/23% caps and are illegal and uncollectible, so lenders are barred and balances can be voided. Collecting an illegal loan is itself prohibited.
If you already have a payday loan in Massachusetts
A loan that violates Massachusetts’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 Massachusetts AG’s office and the Division of Banks.
- Loans above the 23% small-loan cap are illegal — stop payment and dispute.
Cheaper first — try these before a payday loan in Massachusetts
Payday Loans and tribal lenders in Massachusetts
Many online lenders that market payday loans to Massachusetts 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 Massachusetts residents and how state law applies to them, see the Massachusetts tribal-lending page.
Tribal loans in Massachusetts →Frequently asked questions
Are payday loans legal in Massachusetts?
In Massachusetts, 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 Massachusetts?
23% APR cap on small loans (≤$6,000) with a small-loan license (12% without one); traditional payday lending is prohibited.
What can I do about a payday loan I already have in Massachusetts?
Because Massachusetts restricts high-cost payday loans, a loan that exceeds the state limit may be partly or fully uncollectible. File a complaint with the Massachusetts AG’s office and the Division of Banks. This is general information, not legal advice.