Can I apply for a payday loan in another state?

Globe map of the United States
In most cases, it is legal to seek out-of-state payday loans. However, while some states have very relaxed laws concerning short-term lending, borrowers should be aware that some states heavily regulate or outright ban payday loans at payday loan retail stores altogether.

Generally speaking, there are few laws that prevent individuals from seeking loans that are offered by lenders in another state. States that ban payday loan retail outlets within their borders do not currently ban the obtaining of a payday loan online or the in-person obtaining of a payday loan in another state.

A borrower that obtains a loan from a retail lender in another state must understand that the laws governing that transaction are based on the laws of the state where the loan was issued, and not from the state where the borrower resides.

For instance, if a person living in California received a loan from a retail lender in Florida, then it would be Florida’s short-term loan laws that would govern the payday loan’s terms and conditions.

However, just because borrowers can apply for loans in another state, that does not mean that the payday loan lender will lend to an out-of-state borrower. Crossing state lines sometimes presents huge legal hurdles for lenders wanting to track down a defaulted borrower. Ironically, the payday loan lender will have to abide by the laws of the state that the borrower lives in should it come time for legal recourse and collection, which can dissuade many lenders from ever dealing with out-of-state borrowers in the first place.

When talking about online payday loans, the laws are different in that the state of the borrower takes precedence over the state of the lender.

For example, if a borrower in California obtains a loan online at his or her home address from a Nevada-based payday loan provider, then California law would govern the transaction due to the way federal law governs online transactions.

Thanks to a rising presence online, it is now relatively easy to find online payday loan lenders who are willing and able to wire funds across state lines.