How Many Payday Loans Can You Have in California? 


We have explored that 57% of Americans have difficulties covering minor unexpected expenses. Statistics show that nearly 27% of all the country’s citizens have less than $1,000 in savings, and around 12% don’t have them at all. The insufficient number of nest eggs makes dealing with emergencies unaffordable for many U.S. residents. Here, payday lending comes to the rescue. 

Borrowing from a payday lender comes with numerous risks. An individual applies for a high-interest payday loan and then can’t pay it off due to the high charges. The standard solution is to take multiple loans to return the previous ones.  

To protect residents, California state law implements certain restrictions on the number of loans, maximum loan amounts, and interest rates. How many payday loans can you have in California? Keep reading to get the answer to this and other questions related to payday lending law in the state.  

What Is an Online Payday Loan?  

Payday loans are short-term loans usually taken by the borrower’s next paycheck, up to 31 days. With this borrowing option, you can typically get up to $1,000, but this amount may be smaller or larger in several states. People use it to cover minor financial expenses, such as car repairs, medical bills, home improvements, utilities, etc.  

The main advantage of online payday loans in California is their simplicity. You can get them from the comfort of your own home just by submitting an application form from your PC or smartphone. These loans don’t require a hard credit check through three major credit bureaus (Equifax, Experian, and TransUnion) and can be taken even with a bad credit score.  

Due to the lack of hard credit inquiries and fast deposit time which generally does not exceed 24 hours, a financial institution may charge you a too high interest rate reaching 400% APR (annual percentage rate).  

California Payday Loan Laws 

Unlike Arizona, Colorado, New York, Pennsylvania, and several other states, the payday loan industry is legal in California. However, providers need a license from the Department of Business Oversight to operate in the state. You can find more information about the payday loan regulations in Civil Code 1789.30 and the Financial Code 23000 et seq. If you notice that California’s payday lender breaks the state’s laws and regulations, please immediately report it to the Consumer Financial Protection Bureau.  

This type of loan is also called a “deferred deposit transaction.” According to the law, payday loan amounts can range between $100 and $300, with up to 31 days of repayment terms. The money should be repaid with interest rates that can’t exceed 15% APR. Lenders may also charge additional fees. The loan amounts, terms, and conditions should be described in the loan agreement, which signing is mandatory for each provider.  

Rollovers and additional charges are prohibited. There are also no cooling-off periods, and only one outstanding loan is allowed.  

Payday Loan Trap 

Even states with the legal status of the payday lending industry often prohibit taking multiple payday loans at once. This action is designed to protect borrowers from getting into a cycle of debt. People often get a loan without ensuring whether they are able to pay it back. As it is an extremely high-interest loan, returning even a $100 loan may be challenging, and many individuals can’t return a payday loan within loan terms. 

Late repayment of the loans can lead to higher interest and additional fees, which make borrowers apply for a second payday loan to return the first one. It often leads to a larger debt, and people need to take another loan. This process can last for long, and the debt will only increase. Therefore, you should borrow only the loan products you can pay off.  

What Are the Requirements for an Online Payday Loan in California?  

To obtain a payday loan, a borrower should meet the following eligibility criteria:  

  • Be a U.S. citizen or a permanent resident;  
  • Be at least 18 years old; 
  • Have a valid government-issued ID (driver’s license or passport) 
  • Have proof of steady income (job or government benefits);  
  • Have an active checking account; 
  • Have a phone number and email address. 

How to Apply for Payday Loans in California? 

California payday loans can prove to you that borrowing money does not have to be complicated and stressful. The application process for these small loans is fast and straightforward. Take the following steps and get the funds into your bank account the next business day:  

  1. Compare lenders. Shop around to see various providers and compare their loan offers, interest, and terms. Read other customers’ reviews to find the best option. 
  1. Check eligibility. Analyze the lender’s requirements to ensure you qualify for a loan.  
  1. Gather documentation. Study what documentation is required to apply through a specific provider and prepare it.  
  1. Submit an application. Fill out an application form on the lender’s website (or in-store) with your personal information and bank account details. After checking the data, send your form.  
  1. Get approved. If your application is approved, a provider will contact you almost immediately and offer you a loan.  
  1. Sign a loan agreement. To borrow money, you need to sign a contract. Read it carefully before signing to understand your loan terms and conditions.  
  1. Get funded. After signing a contract, a loan provider will send the funds directly into your bank account within 24 hours.  

Payday Lending Scams  

Borrowing from payday loan lenders always means a specific risk. There are a lot of scams in the industry, and it is incredibly difficult to find a trustworthy lender. A common situation is when a person applies for a small loan, pays interest and fees, and never gets the money. A loan provider receives the funds and your bank account information and disappears, withdrawing cash from your account until it is empty.  

How to Stop Predatory Payday Lending in California?  

California payday lending is rich in scams and predatory lenders. The state actively works on improving regulations governing payday lending, but fraud still exists in the industry.  

According to the payday loan regulations in California, borrowers can bring suits against lenders. However, the reality is that lawsuits are costly and take time, enabling many payday lenders to go unpunished. People often lack the funds and time to fight in court with them.  

Another barrier to potential legal actions is that payday lenders often use temporary websites and route loan transactions through third parties, which significantly complicates finding a scammer.  

Can You Have Two Payday Loans at Once in California?  

No, you can’t. In the state of California, you can have only one outstanding payday loan. Taking more than one loan from the same or different lenders is prohibited by the California deferred deposit transaction law, also known as the payday lending law. These restrictions are designed to protect borrowers from getting into a cycle of debt when they borrow new loans to repay the previous ones.  

Alternatives to Payday Loans 

If borrowing from a bank or credit union is not an option for you, you can consider other borrowing options instead of relying on high-risk loans.  

Credit Card Cash Advances 

Instead of working with online lenders, consider withdrawing funds from your credit card if you have one. This option is expensive, but it still has lower interest rates than small loans. Borrowers with good and excellent credit can also apply for 0% APR credit cards. 

Government Programs 

Various government programs offer financial assistance for people in need. If an emergency occurs, we recommend searching the California Department of Social Services for a suitable program.  

Borrowing from Your Friends or Family 

Borrowing money from the people you know is the safest and cheapest financing option. Your friends or family members will not charge you interest and fees, and unlike personal loan lenders, don’t conduct a hard credit check to assess your ability to repay the loan. However, you may break your relations with friends and relatives if you fail to repay the debt on time.  


What is the maximum payday loan amount in California? 

According to California law,  the maximum allowed amount of a payday loan is $300. After you get the cash, you are required to pay it off with interest and fees within 31 days.  

Is there a waiting period between borrowing payday loans in California?  

Yes, you need to wait 31 days before taking another payday loan. This California state regulation is designed to protect borrowers from borrowing several loans and getting into a cycle of debt.  

What are the alternatives to payday loans? 

The most popular alternatives to payday loans are installment loans, payday alternative loans, borrowing from your friends and relatives, credit card cash advances, 401(k) loans, government programs, etc. You also need to improve your credit score to apply for cheaper loans with more favorable terms.  

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