A payday loan is a small, short-term, high-cost cash loan. In most cases, you write a post-dated check for the loan amount plus a fee. The lender holds your check until the due date. Then the lender deposits it, or you pay cash to get your check back.
DFI licenses and regulates payday lenders in Washington. This page explains the state's rules, your rights, and what to check before you borrow.
Washington's payday loan rules
State law sets limits on payday loans:
- Most you can borrow: $700 or 30% of your gross monthly income, whichever is less
- Longest loan term: 45 days
- Highest fee allowed: 15% on the first $500, and 10% on amounts above $500
- Loan limit: no more than 8 payday loans in any 12-month period
Lenders report every loan to a statewide database. This is how the limits are enforced.
Lenders must tell you costs. Lenders must tell you the cost as an annual percentage rate (APR). For example, a 14-day, $500 loan with the maximum fee has an APR of 391%.
Your rights
- You can change your mind. You have one day to cancel the loan.
- You have the right to a payment plan. If you cannot repay on time, you can ask for an installment plan with no extra fees. While you are on an installment plan, you cannot take a new payday loan.
- You must be told all costs before you borrow.
- A lender cannot give you a new payday loan to pay off an old one from the same lender or its affiliate.
- A lender cannot harass you or threaten criminal charges to collect a loan.
If a lender breaks these rules, file a complaint with DFI.
Check the license first
Payday lenders must be licensed by DFI — including online lenders that do business with Washington residents.
This matters because of a powerful protection in state law: a small loan made by an unlicensed lender to someone in Washington cannot be collected. The lender cannot sue you for it in Washington (RCW 31.45.105).
Verify a lender's license online or call 1-877-RING-DFI (746-4334).
A caution about tribal lenders. Some online lenders are owned by federally recognized Indian tribes. These lenders are not licensed or regulated by DFI, and Washington agencies generally cannot help with complaints involving them. Most tribal lender websites say they are tribally owned, but not all do. Check for a DFI license before you borrow.
Before you borrow
A payday loan may help with a one-time shortfall. It is not built for ongoing money needs. Things to consider first:
- Ask about other options. Utility and phone companies may delay a bill or set up a payment arrangement. An employer may offer a paycheck advance.
- Compare costs. Some credit unions offer small loans with much lower fees.
- Borrow only what you can repay with your next paycheck.
- Use one lender at a time and know your due date.