What a payday loan costs — before New York’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 New York
- Rate cap
- 16% civil usury cap for unlicensed non-bank consumer loans of $25,000 or less (Banking Law § 340); loans above 25% are criminal usury (Penal Law § 190.40).
- Key law
- New York Banking Law § 340 (16% civil usury) and Penal Law § 190.40 (25% criminal usury).
- Enforcement
- In August 2013, DFS Superintendent Benjamin Lawsky sent cease-and-desist letters to 35 online payday lenders and asked NACHA and 100+ banks to "choke off" ACH access. In Otoe-Missouria Tribe v. NYDFS (2d Cir. 2014), the court let New York regulate tribal-affiliated online lending.
In 2013, NYDFS ordered banks and the ACH network to block debits for 35 illegal online payday lenders — some found charging over 900% APR (up to 912.49% in the Otoe-Missouria case).
What it means for a New York borrower
Payday and tribal high-cost loans are illegal and unenforceable in New York, and the state actively cuts off the payment rails used to collect them. Loans above the criminal-usury rate are void.
If you already have a payday loan in New York
A loan that violates New York’s ban 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 New York Department of Financial Services (NYDFS) and the NY Attorney General.
- Because unlicensed loans over 16% are usurious (and over 25% criminally usurious/void), dispute the debt and revoke any ACH authorization with your bank.
Cheaper first — try these before a payday loan in New York
Payday Loans and tribal lenders in New York
Many online lenders that market payday loans to New York 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 New York residents and how state law applies to them, see the New York tribal-lending page.
Tribal loans in New York →Frequently asked questions
Are payday loans legal in New York?
In New York, a payday loan at typical rates is not legally viable. The state’s rate cap makes a ~400% APR loan void and not legally collectible, so licensed storefront payday lenders do not operate — and online or tribal lenders that lend anyway are on weak legal footing.
What is the maximum payday loan rate in New York?
16% civil usury cap for unlicensed non-bank consumer loans of $25,000 or less (Banking Law § 340); loans above 25% are criminal usury (Penal Law § 190.40).
What can I do about a payday loan I already have in New York?
Because New York effectively bans high-cost payday loans, a loan that exceeds the state limit may be partly or fully uncollectible. File a complaint with the New York Department of Financial Services (NYDFS) and the NY Attorney General. This is general information, not legal advice.