Louisiana Payday Loan Laws: The Ultimate Legislative Guide

Payday loans have such high interest rates and short repayment terms that their users often get trapped in a cycle of debt. Despite this, the federal government doesn’t have legislation in place to restrict them. Instead, states can regulate them as they see fit, and each one has different rules. These are the Louisiana payday loan laws.

Payday lending status in Louisiana: Legal

Louisiana is one of the many states in America that still allows the payday lending industry to flourish. While there are some minor limitations, lenders can still charge interest rates well into the triple digits.

As a result, Louisiana payday lenders frequently trap their borrowers in a series of endless debt payments. In fact, it’s one of the worst states for payday loans in the country. Louisiana ranks number five for the most consumer payday loan complaints per capita.

READ MORE: States where payday loans are illegal

Loan terms, debt limits, and collection limits in Louisiana

• Maximum loan amount: $350
• Maximum Interest Rate (APR): 697.41% on a 14-day loan of $100
• Minimum loan term: N/A
• Maximum loan term: 30 days
• Number of rollovers allowed: None unless the borrower pays 25% of the advance plus fees
• Number of outstanding loans allowed: Any
• Installment option: Once every 12 months
• Cooling-off period: None
• Finance charges: 16.75% of the advanced amount capped at $45, plus one $10 documentation fee. Once in default, 36% interest for the first year and 18% for the second year. One non-sufficient funds (NSF) fee.
• Criminal action: Prohibited

The Louisiana payday loan laws are straightforward, with explicit restrictions on what payday lenders can charge for their products. As a result, you should be able to tell when a lender is trying to violate your rights.

Unfortunately, your rights aren’t very helpful. Payday lenders don’t have to break the rules to charge rates beyond what most borrowers can afford to repay.

There are even specific provisions that let lenders roll loans over indefinitely. As a result, the payday loan trap is stronger there than in most states.

READ MORE: Guide to debt relief in Louisiana

Louisiana payday loan laws: How they stack up

Even though payday loans have consistently caused more financial problems for consumers than they’ve solved, they’re still legal in most areas of the United States, including Louisiana.

Compared to the other states that allow payday lending, Louisiana’s regulations are at least fairly clear-cut, with few gray areas. It still wasn’t enough to keep two Louisiana cities off the list of cities with the worst payday lending problems.

READ MORE: How to get out of a payday loan nightmare

Maximum loan amount in Louisiana

Regardless of a borrower’s income and other financial circumstances, payday lenders can only offer loans with principal balances up to $350. That’s less than average. Many states choose to allow up to $500 in payday loans.

What is the statute of limitations on a payday loan in Louisiana?

A statute of limitations is the period during which creditors and debt collectors can sue a borrower for outstanding debts. Once it passes, you can use the age of your loan to defend against any lawsuits they initiate against you.

In Louisiana, the statute of limitations for written contracts, including payday loans, is ten years.

READ MORE: What is the statute of limitations on debt

Rates, fees, and other charge limits in Louisiana

The Louisiana payday loan laws state that lenders can charge no more than 16.75% of a loan’s principal amount in fees, though they can’t ask for more than $45 in total.

Note that $269 multiplied by 16.75% is $45, which means that once your principal balance reaches roughly $269, your finance charge is going to be the same as it would be if your principal were $350.

In addition, payday lenders can charge a documentation fee of up to $10. That’s separate from your finance charge, which means you can pay a maximum of $55 for a payday loan in Louisiana.

If you default on your loan, payday lenders can start accruing interest on the outstanding amount. They can charge up to 36% during the first year and 18% during the second year.

They can also charge one NSF fee (nonsufficient funds fee) for the charges they incur when they attempt to cash your post-dated check and fail.

For example, say you borrow $200 from a payday lender for a finance charge of $33.50 and a $10 documentation fee. However, after two weeks, your check bounces when your lender tries to cash it, and they pay a $20 fee as a result.

At that point, they start charging you interest at 36% on the $243.50 balance plus the $20 NSF fee. After six months, you pay off the initial debt plus $43.79 in interest.

Maximum term for a payday loan in Louisiana

Payday loans can have a maximum loan term of 30 days in Louisiana. However, borrowers can request a payday loan extended payment plan once every twelve months.

Pro tip: Louisiana is one of 16 states that require payday lenders to offer EPP loans. However, borrowers must request extended payment plans in writing before the initial due date.

The installments must be substantially equal, and the borrower can prepay without penalty at any time.

Borrowers can also roll their loan over and enter into a new payday loan agreement by paying 25% of the principal amount plus the finance charges.

How many payday loans can you have in Louisiana?

No law limits the number of payday loans Louisiana residents can have simultaneously, but if you need more than one, you’ll likely have to use a different lender. Though payday lenders don’t report loans to the three major credit bureaus, they do have their own reporting system, so if you already have a couple of outstanding payday loans — or have defaulted on a previous payday loan — the new lender will typically be aware.

There’s also no overall limit to the number of payday loans you can have, so once you pay off your original loan, you’re immediately eligible for a new loan. However, this isn’t recommended.

READ MORE: Can you have multiple payday loans?

Are tribal loans legal in Louisiana?

Native American tribes are sovereign nations in the United States. That means they’re generally immune to state regulations and it’s hard to sue them for breaching the laws of the states they reside in, though they usually follow applicable federal laws.

Tribal lenders are a type of short-term loan provider that partners with Native tribes to try and share in their tribal immunity. They use that as an excuse to sidestep the regulations meant to protect consumers, such as the rate restrictions on payday loans.

Tribal lenders are technically legal in Louisiana. There are no prohibitions on offering lending services from a Native American reservation. However, Louisiana requires lenders to be licensed by the state’s Office of Financial Institutions. Because tribal lenders don’t follow state laws, many are unlicensed. This means the loans may not be legally collectible.

Despite the lack of licensing, tribal lenders still have a presence in the state. It’s even harder to eliminate them than traditional payday lenders since it takes a much more drawn-out legal process for authorities to impose sanctions on them.

READ MORE: Is my payday lender licensed in my state?

Consumer information

The Louisiana Office of Financial Institutions is responsible for supervising all entities that provide financial services to consumers within the state. They have three divisions, one for each type of institution: Depository, Non-Depository, and Securities.

Payday lenders, also known as deferred presentment and small-loan lenders, fall under the jurisdiction of the Non-Depository Services Division. The Division oversees licensing for the lenders and provides educational resources for consumers on Louisiana payday loan laws.

Where to make a complaint

The best place to register a complaint about a payday lender in Louisiana is with the Office of Financial Institution’s Non-Depository Division. Here’s what you need to know to get in touch with them:

• Regulator: Non-Depository Division of the Louisiana Office of Financial Institutions
• Address: Post Office Box 94095, Baton Rouge, LA 70804-9095
• Phone: (225) 925-4660 or (888) 525-9414
• Link to website: http://www.ofi.state.la.us/complaints.htm

You can also submit a complaint to the Consumer Financial Protection Bureau (CFPB). The CFPB is a federal organization created to protect consumers against abuse from financial institutions, including payday lenders.

Number of Louisiana consumer complaints by issue

These statistics are all according to the CFPB Consumer Complaint Database.

As is the case in most states where payday lending is legal, the most common complaint consumers make to the CFPB is that their lenders are charging them fees or interest that were unexpected.

While there’s a significant drop-off in numbers between first and second place, they are both for similar issues, as the runner-up is that borrowers are struggling to keep up with the overwhelming costs of their loan.

The most complained about lender in Louisiana: Enova International, Inc.

Though the competition is fierce in Louisiana, the most complained about lender in the state is Enova International, Inc. While the company doesn’t offer consumer credit directly, it’s the parent company for several different lending brands, including CashNetUSA and NetCredit.

While neither one offers payday loans in Louisiana, their interest products still carry interest rates that are predatory.

CashNetUSA offers lines of credit in the state between $100 and $3,000 with APRs from 149% to 299%. Any time you draw on your line of credit, you pay 15% of the amount drawn as a transaction fee.

NetCredit offers personal loans and lines of credit, with similarly excessive interest rates. Their personal loans can cost up to 155% APR. Since they can also have principal balances of up to $20,000, these are potentially life-ruining loans.

To use NetCredit’s own example, if Derek receives a loan of $3,199 with a 36-month repayment term, he would have a monthly payment of $253. Over his loan term, Derek would pay a staggering $5,909 in interest to borrow $3,199.

That’s almost double his principal balance, and their loans can be even more expensive. That’s an APR of just 94%.

Most common complaints about Enova International, Inc.

The most common complaint borrowers have about Enova International is that they charge unexpected fees and interest. Of course, you probably expected that, given Derek’s example above.

Notably, NetCredit leaves the interest amount out of their version of the example, which suggests that they tend to minimize the cost of their loans when marketing to consumers.

Top 10 most complained about payday lenders

Given that payday lending is legal in Louisiana, it should come as no surprise that consumers in the state have complaints about more than just Enova International, Inc.

In fact, the runner-up for the top spot on the list fell short by just two complaints. They are CURO Group Holdings, which happens to be the parent company for one of the biggest payday lenders in the country: SpeedyCash.

While some of the other lenders on the list offer high-interest installment loans instead of payday loans, the primary issue is the same among most of them. They charge way too much for their services, and borrowers can’t keep up with the cost of their loans.

If you’re having financial problems because you owe money to businesses like those listed above, contact DebtHammer for a free quote. We’ll help you turn the tables on your lenders and get out of debt, once and for all.

The most complained about tribal lender in Louisiana: Big Picture Loans, LLC

Payday lenders have a habit of fighting against the laws in place to protect consumers. One of the strategies they’ve used is to strike deals with Native American tribes, becoming tribal lenders.

Tribal lenders give a percentage of their earnings to a native American Tribe. In return, the Tribe claims them as an extension of their sovereign nation, giving them immunity to state law. They use it to jack up the prices of their lending products.

READ MORE: How to get out of high-interest tribal loans

Big Picture Loans, LLC is a tribal lender that operates in Louisiana, and more consumers complain about them than any other. In fact, they even rank fourth in the state for most complaints regardless of lender type.

Their loans have principal balances from $200 to $5,000 and have APRs between 35% and 699%. Naturally, though, the lowest possible APR is 200% for all new customers.

Most Common Complaints About Big Picture Loans, LLC

Like most of the other worst lenders in Louisiana, consumers complain most about Big Picture Loans’ fees and interest. Given that their APRs can reach 699%, that makes a lot of sense.

Payday loan statistics in Louisiana

• Louisiana ranks as the 19th state for the most overall payday loan complaints.
• Louisiana ranks as the 5th state for the most payday loan complaints per capita.
• There have been 18,281 payday loan-related complaints made to the CFPB since 2013―365 of these complaints originated from Louisiana.
• The estimated total population in Louisiana is 4,648,794 people.
• There are 7.8515 payday loan complaints per 100,000 people in Louisiana.
• The most popular reason for submitting a payday loan complaint is “Charged fees or interest you didn’t expect.”

READ MORE: Payday loan debt statistics

Historical timeline of payday loans in Louisiana

Unfortunately, the Louisiana payday loan laws have favored lenders over consumers for quite some time. All attempts to reverse that have failed. Here’s a quick overview of the state’s history with payday loans:

• Pre-1999: Louisiana had a 12% usury cap on consumer loans that prevented the payday loan industry from taking hold.
• 1999: Legislation passed that established the Deferred Presentment and Small Loan Act, opening the door for the payday loan industry. It still regulates payday lenders in 2021.
• 2014: There was a push to limit the legal APRs in Louisiana to 36%, but the legislation failed.
• 2018: The Louisiana Installment Loan Act threatened to give payday lenders even more freedoms, but it didn’t pass.

Louisiana has been in the hands of payday lenders for decades now. However, there has been some back and forth from legislators over whether or not that’s for the best. If you live in the state, consider reaching out to lawmakers and encouraging them to rein in the industry.

Flashback: A Louisiana payday loan story

Louisiana has been a safe and profitable space for payday lenders since the early 2000s. They’ve had many years to establish their presence in the state, and they’ve used it to consolidate their legislative influence.

In 2014, many people in the state had had enough and tried to fight back against the industry. Outraged by the inhumanity of the payday loan trap, Together Louisiana and AARP Louisiana pushed to make the loans cheaper.

State Senator Ben Nevers heard their appeals and sponsored legislation that would limit the number of loans a borrower could have, cap the annual interest rate to 36%, and set up a database to track payday loans.

In response, payday lenders used their deep pockets to hire an army of lobbyists. Eventually, they managed to kill the legislation. At one point, the bill in question did nothing but cap the number of payday loan transactions a borrower could have in a year to ten.

Even that, the payday lenders and their lobbyists pushed back on, despite its meaninglessness. For perspective, Florida and Oklahoma limited borrowers to one and two loans per year, respectively.

Eventually, it became apparent that there could be no compromise, and the bill died in the state senate.

The bottom line: Should you take out a payday loan in Louisiana?

Payday loans have dangerously high interest rates and short repayment terms that consistently trap borrowers in a cycle of debt payments they can’t escape. The Louisiana payday loan laws do little to prevent that. If you can help it, never take out a payday loan there or anywhere else.

If you have bad credit but need affordable short-term financing, try using a paycheck advance app like Dave instead. You can get an advance on your earned wages up to $200 and pay nothing except a membership fee of one dollar per month.

Of course, borrowing money will only get you so far. If you want a long-term solution, contact us for a free quote. DebtHammer can help you formulate a plan to leave your debts behind forever.