CLEARBORROW · PUBLISHED NOVEMBER 12, 2026
Payday loans in Pennsylvania: why they aren’t allowed
Pennsylvania does not have legal payday loans. Under the Consumer Discount Company Act, a lender licensed by the Department of Banking and Securities may charge up to 24% a year on loans of $25,000 or less; an unlicensed lender is bound by a 6% cap. Courts have confirmed these laws apply to loans made over the internet. Report offers to the Department’s hotline, 1-800-PA-BANKS (800-722-2657).
On this page
What the law says
- A lender licensed by the Department may charge an annual interest rate up to 24% for loans of $25,000 or less (DOBS ↗).
- A lender that is not licensed is bound by the 6% cap of the Loan Interest and Protection Law (DOBS ↗).
- A court agreed that the Consumer Discount Company Act and the Loan Interest and Protection Law apply to loans made to Pennsylvania consumers over the internet (DOBS ↗).
Online “payday” offers
The Department has received many complaints about loans taken over the internet or by mail from so-called payday lenders, and urges consumers to make sure a non-bank lender is licensed (DOBS ↗).
What 24% means
| Our example at 24% a year | Interest |
|---|---|
| $500 for 30 days | $9.86 |
| $1,000 over 12 months | About $135 |
Our arithmetic, compared with about $75 in fees on a two-week $500 payday loan elsewhere at $15 per $100.
Check or report a lender
Call the Department of Banking and Securities consumer hotline at 1-800-PA-BANKS (800-722-2657) or visit its website (DOBS ↗).
Options in Pennsylvania
- A payday alternative loan from a federal credit union (APR capped at 28%).
- A cash advance app — compare costs with our fee calculator.
- Asking the company you owe for more time or a payment plan.
- If you already owe a payday loan: extended payment plans and getting out of payday debt.
Questions
Are payday loans legal in Pennsylvania?
No. Licensed lenders are limited to 24% a year on consumer loans of $25,000 or less, far below payday pricing.
Does the cap apply to online lenders?
Yes. A Pennsylvania court agreed that state lending laws apply to loans made to Pennsylvania consumers over the internet.
Are cash advance apps allowed?
Apps that advance earned wages work differently from loans. Check each app’s fees with our calculator.
Sources and limits
- Pennsylvania DOBS: interpretive letter on maximum interest rates (CDCA 24%, LIPL 6%) ↗
- Pennsylvania DOBS: avoid unlicensed lenders (consumer hotline) ↗
- Pennsylvania DOBS: court confirms state law applies to internet loans ↗
Sources checked November 12, 2026. Laws change; confirm with your state regulator before borrowing. This is general information, not legal advice. Worked examples are our own arithmetic. How we use sources.