Payday loans in California are generally permitted.
Payday loans are governed by both federal and California state law. Under federal law, all Payday Lenders must comply with Regulation Z of the Truth-in-Lending Act. The amount of the loan, the amount of finance charge that will be assessed against you and the annual percentage rate (APR) of the loan must be conspicuously displayed on the contract/agreement you will sign.
While payday loans are legal in the state of California, the State has passed a number of laws regulating payday loans. Some important features of the California law are:
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Payday loans in California cannot exceed $500, exclusive of any fees charged for the loan.
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The lender cannot charge more than 15% of the amount of the loan in fees.
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The term of the payday loan cannot exceed 31 days
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The payday loan agreement must specify the name and address of the lender, the transaction date, the amount of the loan, the loan fees, the total fees paid expressed both as a dollar amount and an effective annual percentage rate, the due date of the loan, and disclosure of any returned check charges.
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No customer can have more than one outstanding payday loan at any given time.
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The lender cannot rollover ("extend") the loan.
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The borrower is not subject to criminal prosecution for failing to repay a loan, and the lender can not threaten criminal prosecution to collect.
California has enacted additional protections for Military borrowers. Any person who violates any provision of §670 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364) or any provision of §232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register, violates this provision.
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