Payday Loans - Financial Regulation
Download the Payday Loans brochure
Overview of Protections Under Federal and Maryland Law
Suggestions to Avoid Needing a Payday¨ Loan
Think carefully about a consumer loan you may take.
What is a "Payday" Loan?
A payday loan is a term used to describe a short-term, high-interest loan, sometimes referred to as a
“cash advance”, regardless of whether payment of the loan is linked to a borrower’s payday. The high
cost of these short-term loans can sometimes trap consumers into a cycle of debt. These loans are advertised through the radio, television, the internet, and direct mail.
Your Protection Under Federal Law
Generally, the Federal Truth and Lending Act treats payday loans like other types of credit:
- The lender must disclose the cost of the loan;
- The lender must disclose the finance charge (a dollar amount);
- The lender must disclose the annual percentage rate (APR- the cost of the credit on a yearly basis);
- The lender must put these and other terms of the loan in writing before you sign for or authorize the loan.
If you believe a lender has violated the Truth in Lending Act, file a complaint with the Federal Trade Commission toll free, 1-877-FTC-HELP/ 1-877-382-4357 or use the online complaint form.
Your Protection Under MD Law
Under Maryland law, MOST lenders are required to be licensed by the Commissioner of Financial Regulation. Interest rates are restricted depending on the loan size.
Something as simple as cashing a post-dated check can be a loan under Maryland law (see Md. Code Ann., Fin. Inst. §12-102(b)).
First $1,000 of a Loan $2,000 or less:
Maximum interest rate allowed by law is 2.75 percent per month or an annual interest rate of 33 percent.
Next $1,000 of a $2,000 Loan:
Maximum interest rate allowed by law is 2 percent per month or an annual interest rate of 24 percent.
Loans Greater Than $2,000:
For loans greater than $2,000, the maximum interest rate allowed by law is 2 percent per month or an annual interest rate of 24 percent on the entire amount of the loan.
Subject to certain exceptions, under Maryland law, a person is prohibited from lending $25,000 or less if the person charges or receives a greater rate of interest than authorized by the laws of this State (see Md.Code Ann., Com. Law II §12-314).
If you believe a lender has violated the Maryland Consumer Loan Law, file a complaint with the Office of the Commissioner of Financial Regulation.
Consumer Services Unit:
410-230-6077 or toll free 888-784-0136
The Commissioner of Financial Regulation is responsible for regulating those who are licensed (or who should be licensed) to do consumer lending. If you are uncertain as to whether a company is licensed in Maryland, please review our licensing search page.
If you have a complaint against a consumer lender that is licensed or a company that should be licensed by the Commissioner of Financial Regulation, or otherwise believe has violated Maryland law, and you would like to file a complaint regarding this transaction or lender, please send the following information to the Commissioner of Financial Regulation's Consumer Services Unit:
- Complaint letter or Completion of Complaint form (Word) or Formulario de Queja (Word)
- Payday loan contract
- Proof of payments,e.g. bank statements,
- Bank Release Authorization Form
If the above information is not provided, the complaint may be closed without further review.
Address to send complaints:
Commissioner of Financial Regulation
Attention: Consumer Services Unit
500 North Calvert Street, Suite 402
Baltimore, Maryland 21202
You can also fax to:
Attention: Consumer Services Unit
Fax number: 410-333-3866
You can also email/scan your document to: DLFRComplaints-DLLR@maryland.gov.
You can also walk in to our offices at 500 North Calvert Street, Baltimore, MD, 21202, Suite 402: Walk-in Hours are: 9:00 am - 4:00 pm
Consumer Service Unit Phone Number: 410-230-6077
Main Telephone Number: 410-230-6100 or 888-784-0136
Suggestions to Avoid Needing a Payday Loan
Before you are late in making a bill payment, speak with your creditor and ask about making payment
arrangements if you know you are falling behind. If you are in debt, a debt management services (“DMS”) provider may be able to help by negotiating with creditors on your behalf. Two nonprofit credit counseling agencies that have services for consumers in debt are Guidewell Financial Solutions (CCCS of Maryland and Delaware), 1-800-642-2227 and National Credit Counseling Service, 1-800-388-2227.