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Payday Loans

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.

Changes Effective January 1, 2010 New!

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.

Payday Loans In Washington State

Who Licenses And Regulates Payday Lenders In Washington?
In Washington State, the 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.
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: 45 days
Maximum Loan Amount: $700
Maximum Fee: 15% on the first $500 and 10% above $500.

Example 1: A loan for $500 + $75 fee = $575.
Example 2: A loan for $700 + $95 fee = $795
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 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
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.

Find Your Local Consumer Credit Counseling Service
Locate Your Local Asset Building Coalition
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%.

Frequently Asked Questions

Question

I currently have three payday loans pending with three different lenders. Loan #1 was just started on a payment plan, with payments scheduled for 12/18, 1/1, 1/15 and 1/29. Loan #2 is not eligible for payment plans until 1/1 and Loan #3 is not eligible for a payment plan until 1/29.

How will the new law affect me? According to your Web site, I cannot enter into a new loan if I have an outstanding payment plan.

Answer

The three loans will exist outside the database until they are paid. Loan 1 in a payment plan will not be eligible for the new statutory installment plan beginning January 1, unless the lender wants to voluntarily, at no charge to you, extend the terms of the payment plan. Loans number 2 and 3 are each eligible for the new installment plan beginning January 1. The terms and conditions are: no fee for the plan; if the loan is $400 or less, repayment over three months; and if the loan is $401 or more, repayment over six months. To qualify for an installment plan, you must notify the lender, before the loan's due date, that you are unable to repay the loan. The lender must then notify you of the availability of the installment plan.

The law does prohibit a lender from making a loan to you if you are in an installment plan with any lender.

FAQs For Industry

DFI has answered many frequently asked questions from Washington payday lenders. View Industry FAQs.

Materials & Resources

More Information From DFI

File a Payday Loan Complaint
Payday lending complaints are handled by DFI's Division of Consumer Services.
2008 Payday Lending Report (PDF)*
The 2008 Payday Lending Report published by DFI.

* This document is a PDF file, and you will need Adobe Acrobat Reader to view it. If you don't already have Acrobat Reader installed on your computer, you may download it for free from Adobe.

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