California Payday Loans – Online Laws & Regulations


Last updated May 2017.

Senate Bill 515 was a proposed bill introduced in early 2014. It would have established a state-controlled database to document and limit the number of payday loans and installment loans that a California consumer can take out. The bill would have set a limit of 4 payday loans a year. Additionally, it would have increased the amount of time a consumer has to pay off a payday loan. It would have set a minimum of 30 days for every $100 borrowed. Lastly, the bill was set to establish prudent requirements that borrows would need to follow in order to verify a client is able to pay back a direct payday loan. The bill didn’t even make it past the Banking and Financial Institutions Committee! In April of 2014 the committee voted to not pass the bill out of committee onto the full California senate. This essentially killed the bill. It will be interesting to see if any new bills are proposed during the 2015 or 2016 legislative session. Stay tuned for more news regarding California payday loans rules and regulations. These regulations will affect retail payday loan locations in California as well as online firms that offer payday loans in California.


Compared to most states California has rather strict laws when it comes to the regulation of payday and installment loans. In fact many lenders don’t even provide short term loans in California because other states are considerably less restrictive. This includes many firms that provide online payday loans, not just brick and mortar lenders. In just the last year, California sanctioned at least nine payday loan lenders for abusive practices. To offer a payday loan to a resident of California a lender must be licensed by the Department of Corporations. This means unlicensed lenders do not need to follow the normal payday loan laws in California. There will probably be some new regulations regarding cash advances added to the books in 2017. Check back for updates as we continue to update these new regulations and rules. On that note, we recently discussed whether or not a California payday loan lender can sue you for an unpaid payday loan.


California claims the regulations are intended to safeguard and protect consumers from getting taking advantage of when it comes to payday loans. According to Civil Code 1789.30 the maximum loan amount that can be given to a California resident is $300. The maximum loan term for payday loans can be extended out to 31 days. Lastly, A lender can charge no more than 15% of the face amount of the check as a fee. These regulations apply mainly to short term loans. With these types of loans a consumer’s personal check is usually held by the lender or used to electronically debit that consumers bank account.

California payday and installment loan laws are always changing! Check the laws before you apply!

There are a few other minor rules when it comes to payday loan lenders in California. For example, if your loan payment bounces the lender can only charge you once for the bounced check. The amount charged can be up to $15. Your lender can’t offer you a new payday loan to pay off the original loan. Also, the lender can charge no additional fees if you need an extension. Lastly, as a California resident you have the right to ask for and ultimately receive any paperwork regarding the loan. This applies to loans offered in a brick and mortar office and to loans offered online as well. Like many other states, most lenders licensed in California will significantly limit payday loan lending to active duty military members and their close family. California licensed lenders must always abide by the Military Lending Act. This Federal regulation states that no lender can offer a loan with interest rates that are above 36%. This regulation applies to payday loans, installment loans, and auto title loans. Specifically, this law applies to you if you’re an active duty service on active duty, or if you’re the spouse of a family member of someone on active duty.


Keep in mind, regulations only apply to Companies that provide installment loans and payday loans in California. Most reputable lenders will honor these guidelines but there are always going to be companies that fund online payday loans California who try to slide step these regulations. Some lenders may claim that since they’re not headquartered in California the rules and regulations implemented by the state do not factor into their lending process. Also, there are lenders who feel these regulations don’t apply to them at all because they either reside on tribal land or they’re based offshore. Be sure to check this page at least once a month for updates on pending legislation. The payday loan industry is constantly changing and there will always be changes and additions to rules governing payday loans in California. We will continue to update the California payday loan rules and regulations when new issues come up.

California cash advance loan laws