Mississippi Payday Loan Laws: The Ultimate Legislative Guide

Because each state government has the power to create its own regulations for payday loans within its borders, each state is unique. If you’re considering borrowing from a payday lender, you need to know what the law says they can and/or can’t do in your home state. This guide will break down the Mississippi payday loan laws and the condition of the industry there today.

Payday lending status in Mississippi: Legal

Payday lending is currently legal in Mississippi. There are limitations to how much payday lenders can offer and what they can charge, but they’re not very strict. The industry can operate almost entirely free and continues to provide short-term, small-balance, high-interest loans that have a habit of trapping people in a cycle of debt.

READ MORE: States where payday loans are illegal

Loan terms, debt limits, and collection limits in Mississippi

• Maximum loan amount: $500
• Maximum loan term: 30 days
• Number of rollovers allowed: None 
• Maximum number of outstanding loans allowed: N/A, as long as the principal balances are less than $500 in aggregate
• Finance charges: $20 per $100 advanced for checks up to $250. $21.95 per $100 advanced for checks between $250 and $500.
• Collection fees: One $30 NSF fee per due date
• Criminal action: Prohibited

The Mississippi payday loan laws don’t explicitly state any upper limit on interest rates, but it’s possible to extrapolate one from the finance charge restrictions. For example, a $400 loan with a two-week repayment period can cost up to $87.80. That would translate to an APR of roughly 572%.

READ MORE: Mississippi debt relief and resources

Mississippi payday loan laws: How they stack up

The fight to eliminate payday loans in America is progressing slowly. Sixteen states have decided to prohibit the industry, but that means that 68% of them still allow payday lenders to operate with impunity. Unfortunately, many of those remaining states show little to no sign of changing their stances anytime soon. 

Mississippi is one of the 34 states that still allow traditional payday loans. They have some rules in place that limit what the lenders can do, but they can still legally offer two-week loans for a few hundred dollars that come with triple-digit annual interest rates, so they’re not much protection.

Sadly, the Mississippi payday loan laws are par for the course in America. If nothing else, though, that makes them easy to understand. Borrowers shouldn’t have many surprises from their payday lenders in Mississippi.

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

Maximum loan amount in Mississippi

A payday loan in Mississippi can’t be for a balance greater than $500. Because the rule technically prohibits borrowers from writing a post-dated check for $500, the $500 limit includes both the principal balance and the fee. In practice, most payday lenders only offer loans up to $400 to keep things simple. Borrowers can have multiple loans at once as long as the total principal and fees don’t exceed the $500 limit.

Note that there are no income-based restrictions on principal amounts like there are in some other states. The absence of those regulations combined with the CFPB’s new rule that lenders don’t need to check a borrower’s ability to repay a loan makes Mississippi the perfect state for payday lenders to take advantage of people.

READ MORE: Payday loan consolidation and relief that works

Rates, fees, and other charge limits in Mississippi

The Mississippi payday loan laws clearly state what payday lenders can charge. They allow a $20 fee for each $100 of principal on checks up to $250. For those with totals between $250 and $500, the fees can be as high as $21.95 for each $100 of principal.

These fees are based on the total value of the loan, not on the increments. For example, a payday loan of $300 could cost up to $65.85 ($21.95 for each hundred) and not $61.95 ($40 for the first two hundred and $21.95 for the third).

Beyond the finance charges, payday lenders can only collect a single NSF fee of $30 for each due date. Because traditional payday loans get paid off in a single payment, that means they can usually only collect that fee once. The rule stops them from trying to debit a borrower’s bank account multiple times to repeatedly charge NSF fees.

How many payday loans can you have in Mississippi?

No law limits the number of payday loans a borrower 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?

Maximum term for a payday loan in Mississippi

The Mississippi loan laws limit payday loan terms to no more than 30 days. In practice, most payday lenders in the state stick to a two-week turnaround period for payday loans since most borrowers receive their paychecks every two weeks and not monthly.

Are tribal loans legal in Mississippi?

Native American tribes are considered sovereign nations within 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 where they reside, though they typically must follow applicable federal laws.

Tribal lenders are short-term loan providers that partner with Native tribes to try and share in their tribal immunity. They use that as an excuse to sidestep state laws that protect consumers, including payday loan interest rate caps.

Tribal lenders are technically legal in Mississippi. There are no prohibitions on offering lending services out of a Native American reservation. However, lenders in the state must be licensed by the Mississippi Department of Banking and Consumer Finance. The loan may only be collectible if you’ve borrowed money from a lender with the appropriate state license. If you think you’ve borrowed money from an unlicensed lender, you can contact a legal aid group for advice on the next steps.

READ MORE: Is my payday lender licensed?

Consumer information

The Department of Banking and Consumer Finance (DBCF) is responsible for upholding the Mississippi payday loan laws. The DBCF regulates and supervises all state-chartered financial entities. That includes banks, credit unions, non-bank trust companies, and nonbank financial service providers operating in Mississippi. The latter category includes payday lenders, though state laws refer to them as check cashers.

The DBCF manages licenses for entities in the state. They collect applications, fees, and records from each business. They also have the authority to enforce regulations and may shut down an operation if they consider it unsafe for the public.

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

Where to make a complaint

The Mississippi Department of Banking and Consumer Finance is also the best place for consumers to register a complaint about illegal payday lending activities within the state. Here’s the contact information: 

• Regulator: Mississippi Department of Banking and Consumer Finance
• Address: P.O. Box 12129, Jackson, MS 39236-2129
• Phone: 601-321-6901
• Fax: 601-321-6933
• Link to website: https://dbcf.ms.gov/consumer-finance/

Consumers can also submit a complaint to the Consumer Federal Protection Bureau (CFPB). They are the federal government’s organization dedicated to helping consumers with financial issues, including payday lenders.

Number of Mississippi consumer complaints by issue

The following statistics are from the CFPB Consumer Complaint Database.

The most complained about lender in Mississippi: Tower Loan

Payday lenders can operate freely in Mississippi without upsetting the state’s government, but they definitely still upset their customers. The Consumer Federal Protection Bureau releases data on the complaints that customers have about lenders across the country, including the names of the ones people complain about most.

In Mississippi, the award for being the least popular lender around goes to Tower Loan. They’re not technically a payday lender since their products usually come in multiple installments, but they have quite a few traits in common with them. For example:

• They provide loans to people without making sure they can pay them back.
• Their minimum loan balances are low enough that people with small emergencies find them attractive.
• They have an unusually quick process from the application to the transfer of funds.

Tower Loan’s bread and butter are installment loans. They range from $500 to $20,000, and the company advertises them as a way for borrowers to fund their vacations, repair their cars, afford medical emergencies, or improve their homes. Again, this is eerily similar to the marketing that payday lenders use. Interestingly, people complain about Tower Loan for slightly different reasons than they do for traditional payday lenders.

Most common complaints about Tower Loan of Mississippi, Inc.

In a surprising change-up from the most complained about lenders in other states, the most common issue people have with Tower Loan is that they struggle to make their payments. That’s surprising because, in states with payday loans, people usually complain most about lenders who charge unexpected fees and interest.

The change seems to imply that the problems with Tower Loan aren’t just about their interest rates. In fact, their website’s rate estimator tool doesn’t produce any results above 36% APR, which is far below typical payday loan rates. It’s actually the limit that most states impose when they want to eliminate the industry.

Tower Loan’s Better Business Bureau profile provides some insight into why people struggle with their loans so much. Customers report issues like:

• Tower Loan attempting to charge borrowers more than they actually owe
• Poor communication of loan terms and payment due dates
• Tower Loan claiming that they didn’t receive payments when customers swear they paid (or the website not accepting them)
• Customer support being unhelpful and unwilling to work with borrowers, even during tough financial times (like the COVID-19 pandemic)

These are consistent with the complaints that people make to the CFPB. The second-place issue is that there are problems making payments to the company, which goes hand in hand with generally struggling to pay a loan. It’s not that the loan is overtly unaffordable, it’s that they make it logistically and technically difficult to repay. That results in missed payments, late fees, and more interest.

Top 10 most complained about payday lenders

Tower Loan isn’t the only lender in Mississippi with a habit of upsetting consumers. These are the top ten offenders in the state since 2013. With payday lending legal in Mississippi, all of them are free to continue doing business as they please.

Payday loan statistics in Mississippi

• Mississippi ranks as the 28th state for the most overall payday loan complaints
• Mississippi ranks as the 14th state for the most payday loans per capita
• There have been 18,281 payday loan-related complaints made to the CFPB since 2013―191 of these complaints originated from Mississippi
• The estimated total population in Mississippi is 2,976,149 people
• There are 6.4177 payday loan complaints per 100,000 people in Mississippi
• 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 Mississippi

The Mississippi payday loan laws haven’t always been what they are today. There have been several different legislations that have significantly altered the industry in the state, especially over the past couple of decades. Here are some of the most notable events:

• Before 1998: All Mississippi lenders, including payday lenders, have to comply with a 36% APR limit.
• 1998: The Mississippi legislature passes a law that exempts payday lenders from the usury limit. It allows them to charge up to $21.95 per $100 of principal for loans up to $400.
• 2003: New loan term laws pass that allows lenders to offer loans that come due in as little as a week, two weeks, and one month. For loans with a one-week repayment term, the rate is equivalent to 1,144% APR.
• 2012: Payday lender’s exemption to the rate limit is supposed to expire, but the Mississippi Check Cashers Act passes. It makes payday lending legal in the state indefinitely, and the industry has been thriving ever since.

Payday loans are still legal in Mississippi in 2021 and it doesn’t seem like they’re going anywhere anytime soon. The state is full of people who make prime payday loan victims. Mississippi is ranked in the bottom ten states for its economy, fiscal stability, education, and opportunities. It’s going to be bitter work to get payday lenders out of a state with so much opportunity for them.

Flashback: A Mississippi payday loan story

Mississippi has long been one of the worst states for payday loans. They’ve been the poorest state in America for years, and in 2015 they held the country-wide record for the most payday lenders per capita. In 2019, their poverty rate was 19.6%, almost double that of the national average at 12.3%.

To make matters worse, their Mississippi loan laws allow interest rates that are on the higher end, even for payday lenders. The average payday loan has an APR of 391%, while Mississippi lenders routinely charge 572% (a $21.95 fee for a two-week loan of $400). Payday lenders have been taking advantage of their freedoms in the state and the consistent demand to rake in money hand over fist for years.

Of course, discussing the numbers doesn’t always do justice to the reality of things. One great way to put things into perspective is to recount a real story with real people to demonstrate the danger of payday loans. One relevant story occurred in Mississippi back in 2013. It’s particularly appropriate since the star of the story has a familiar name: Tower Loan.

The cost of a lawsuit

When borrowers default on their loans, lenders have the right to sue them. If the lender wins, they can usually get a judgment that allows them to garnish the borrower’s wages until they’ve worked off their debts.

Wage garnishment seems like it would be punishment enough for borrowers who’ve made the mistake of taking a loan from a predatory lender, but it gets worse. States like Mississippi allow lenders to bill borrowers for the cost of suing them too, “within reason.” Unfortunately, the lender gets to decide what’s reasonable.

Unsurprisingly, Tower Loan frequently abused that law back in the early 2010s. They had (and perhaps still have) an attorney named John Tucker on retainer. His job was little more than to fill out some paperwork, but the company reserved the right (hidden in the fine print of their contracts) to charge as much as a third of the debt in question for his services.

They claimed that his skill and expertise were invaluable, even though Tower Loan only used John Tucker when borrowers failed to bring a defense. Many debtors can’t (or assume they can’t) afford a lawyer, and may not even show up to proceedings. In those cases, it was an automatic victory for Tower Loan, so they’d always seek the maximum fees allowable.

Tower Loan then added the fees into the principal balance and both accrued interest at their ridiculous rates. For example, in late 2008, Tower Loan won a judgment against a borrower for $381 and garnished their wages. By 2013, the balance had grown to $3,253, which included legal fees of $790.

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

The Mississippi payday loan laws allow short-term lenders in the state to charge rates far higher than those of virtually every other form of credit. To put their triple-digit APRs into context, a typical credit card’s interest rate (even for those with poor credit) won’t exceed 36% APR.

Taking out a payday loan in Mississippi (or anywhere else, for that matter) is almost always a mistake. They’re far too expensive to be safe, and the lenders who offer them tend to have other problematic business practices that make it too easy for borrowers to fall into a cycle of debt.

If you have poor credit and need some fast cash, there are other ways to go about it that are much safer. Try a paycheck advance app like Earnin (they don’t charge interest) if you need to cover a small emergency. For a longer-term solution, start working on reducing your expenses and increasing your earnings.

If you’ve already taken out a payday loan in Mississippi and need help getting out of the trap, DebtHammer can help. Contact us today to get your free quote so we can turn your finances around together.