A payday loan is a small, unsecured, high interest, short-term cash loan. In most cases, consumers write a post-dated, personal check for the advance amount, plus a fee. The lender holds the check for the loan period and then deposits it, or the customer returns with cash to reclaim the check.
In This Guide:
- Quick Facts About Payday Loans
- Who Licenses and Regulates Payday Lenders in Washington State?
- Filing A Complaint Against A Payday Lender
- Maximum Loan Amount and Terms
- Tribal Lenders
- Internet Payday Lenders
- Checklist Before Taking Out A Loan
- Your Rights As A Washington Resident
- Additional Resources
Quick Facts about Payday Loans
- You may only borrow a total of $700 or 30% of your gross monthly income, whichever is less.
- Your information will be registered in a state-wide database, ensuring that all payday lenders have your most up-to-date loan information.
- You may only take 8 payday loans per 12-month period.
- If you are unable to repay your loan before your loan is due, you may request an installment plan with no additional fees.
- If you currently have an installment plan you may not receive another loan.
- Lenders may not harass or intimidate you when collecting a loan. If you are harassed, contact DFI and file a complaint.
Who Licenses and Regulates Payday Lenders in Washington?
In Washington State, the Washington State Department of Financial Institutions (DFI) licenses and regulates payday lenders and the payday loan industry. You can verify the license of a payday lender in Washington State by calling 1-877-RING-DFI (746-4334) or verifying a license online.
Filing A Complaint Against A Washington Payday Lender
If you have a complaint against a payday lender operating in Washington, file a complaint with DFI.
Maximum Loan Amounts & Terms in Washington
Maximum Loan Term:
Maximum Loan Amount:
$700 or 30% of your gross monthly income, whichever is less
15% on the first $500 and 10% above $500.
Consumers should be vigilant when seeking payday loans from companies seen advertised on TV or online. Many of these companies are owned by federally recognized Indian Tribes, which are not licensed or regulated by the Department and are not registered to conduct business in Washington State.
Most Tribal loan websites include notice of their Tribal affiliation, but not all. Additionally, while Washington State law provides in RCW 31.45.105(1)(d) and (3) that a “small loan” (defined as a loan that does not exceed $700) made by an unlicensed entity to a person physically located in Washington State is uncollectible and unenforceable in Washington State. Washington State agencies are generally not able to assist consumers in matters involving federally recognized Indian Tribes.
Internet Payday Lenders
Internet payday lenders that do business with Washington residents must be licensed by DFI and adhere to Washington's loan limits and terms. Before doing business with an internet payday lender, make sure they are licensed by DFI.
Checklist - Before Taking out a Payday Loan
Although a payday loan may be a convenient short-term solution, it is inappropriate for long-term cash needs.
- Verify the License of the Payday Lender
Contact the Washington State Department of Financial Institutions to verify that you are dealing with a licensed lender. Call 1-877-RING-DFI (746-4334) or verify a license online at www.dfi.wa.gov.
- Consider Alternative Solutions
Ask about delaying or making payment arrangements on your non-interest bills like telephone and utility bills. Talk to a friend or family member about borrowing money. Ask your employer for an advance on your paycheck.
- Comparison Shop
Comparison shop for the lowest fees and penalties. For example, some credit unions offer payday loans with lower fees.
- Borrow Only What You Can Afford To Pay Back
Borrow only as much as you can afford to repay with your next paycheck.
- Avoid Borrowing from More Than One Lender
Avoid borrowing from more than one lender at a time.
- Know When Your Payment Is Due
Know when your payment is due and be sure to repay the loan on time and in full.
- Take Advantage of Organizations That Are Available To Help You with Your Financial Situation
Local organizations across Washington are available to help you with your financial situation. Many of these organizations offer help with budgeting, credit repair, debt repayment, and more. Contact your local consumer credit counseling service or asset building coalition for more information.
- Set Up A Budget
Plan for the future by making a realistic budget to help avoid the need to borrow for emergencies and unforeseen expenses.
Your Rights as a Washington Resident
- Any payday loan obtained from a lender not licensed with the DFI, and not repaid to the lender may not be collected by lender and the lender may not pursue action in Washington State to collect the debt. See RCW 31.45.105.
- You have the right to change your mind about the loan within one day.
- You have the right to know all of the costs involved. You also have the right to a payment plan.
- A payday lender may not threaten criminal prosecution as a method of collecting a past due loan.
- A payday lender may not allow a borrower to use a new payday loan to pay off an existing payday loan by the same lender or an affiliate of the lender.
- Under the Truth in Lending Act, the cost of credit must be disclosed. Among other information, you must receive information outlining the finance charge and the annual percentage rate (APR). The APR informs you of the cost of your loan. For example, a 14-day, $500 payday loan with the maximum fee permitted by statute would have an APR of 391.07%.
Alerts, Resources & Publications
- Payday Lending - Borrower Rights and Responsibilities
- Payday Lending - Borrower Rights and Responsibilities - Español