Massachusetts Payday Loan Laws

Massachusetts has only one payday lending law in the state and that is illegal. If any payday loan service is operating within the state, they are doing so illegally. There are heavy fines for breaking this law.

• Maximum Payday Loan – Prohibited
• Maximum Payday Loan Annual Percentage Rate – Prohibited

However, the state’s Division of Banks does have a provision for lenders to register as such if they plan to loan out under $6,000 dollar loans. The Annual Percentage Rate (APR) on these small loans is 23 percent total. Also, the lender’s fees may not be higher than 20 dollars. Any small loans of this type are closely monitored to be sure they are not breaking usury laws, which make payday loans illegal. In addition, a client must receive a complete paperwork write up, including agreements, pay schedules, loan notes, and any signature pages.

The residents of Massachusetts are not clear from dealing with payday lenders. They are targeted by torrents of online payday loan services. These companies have found that if they operate outside of Massachusetts, they are not subject to the usury laws in the state. Many even operate internationally where there are very few, if any, regulations on Annual Percentage Rates (APR), fees, and loan amounts. However, the majority of these online payday infiltrators are being investigated by Massachusetts authorities. They plan to create legislation to stop this practice in the future.

So, until the Massachusetts lawmakers find a method to best deal with payday lending services online, residents of the state are open to exorbitant APR rates on any loan he or she agrees to. There are a few provisions the state has made in respects to the right for the customer to know Massachusetts has set limits. For example, a payday loan from an online company must include that although they may be paying a high ARP rate, the state only allows a maximum of 15 percent on small loans.

For Massachusetts residents looking for a quick loan for bills or car issues will always fare much better going to a small loan provider within the state than relying on predatory payday lenders that have found a loophole. Some of these lenders will charge over 500 percent on a small $100 to $200 dollar two-week loan. They may even allow extensions on the loans with additional APR added. Also, there is no protection for any large administrative and/or handling fees. These payday lending services that operate online are targeting those most in need, and they know it.

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