Which State Has The Most Payday Loan Stores?

The number of payday lenders in the U.S. is about 23,000 — twice the number of McDonald’s restaurants. Though some states have made payday lending outright illegal, other states are plagued by payday lenders that take advantage of desperate individuals when they’re at their lowest point. To learn where your state stands, explore the numbers below.

Here are the states with the most payday loan stores

  • California: 2,451
  • Texas: 1,652
  • Tennessee: 1,344
  • Mississippi: 1,100

However, New Mexico tops the list of states with the most payday loan stores per capita. Here are the top 10 states with the most payday loan storefronts per 100,000 residents:

  • New Mexico 41.78 
  • South Dakota 40.01 
  • Mississippi 38.67 
  • Alabama 26.47 
  • Tennessee 23.62 
  • Louisiana 22.58 
  • South Carolina 22.48  
  • Missouri 22.47
  • Utah 19.12
  • Kentucky 17.49

Cities with the worst payday lending problems

A 2021 DebtHammer report found that these are the top 10 U.S. cities with the biggest payday lending problems:

  • Memphis, Tennessee
  • Jackson, Mississippi
  • Las Vegas, Nevada
  • Baton Rouge, Louisiana
  • New Orleans, Louisiana
  • Nashville, Tennessee
  • Chattanooga, Tennessee
  • Dallas-Fort Worth, Texas
  • Houston, Texas
  • Birmingham, Alabama

States where payday loans are illegal

Payday loans are currently illegal in:

Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia, and the District of Columbia. Other states have rate caps that limit the APR lenders can charge you. The Center for Responsible Lending breaks down the laws in this map.

What is a payday loan?

A payday loan is a short-term loan with exorbitantly high interest rates typically meant to be repaid by your next “payday.” In practice, they are a form of predatory lending where APRs can reach up to 600%, forcing borrowers to pay more in interest than what the original loan was. This traps many in a debt cycle where they are forced to take out a new loan to pay for the first loan, or they roll over the loan, causing the amount they owe to skyrocket. Borrowers can get payday loans from local storefronts or online. All you need to qualify is a checking account, an ID, and proof of income.

Payday loan interest rates

According to the Pew Charitable Trusts, it takes the average payday loan borrower five months and multiple loan rollovers to repay a $300 payday loan. At 662% APR, it will cost $1,001 to pay back a $300 loan over five months.

This example isn’t an outlier either, as borrowers say the average APR they’re offered is 400%.

More than 90% of borrowers end up regretting their original payday loan, so think twice before turning to a payday lender.

Watch and learn how payday loan borrowers can end up trapped in a cycle of debt.

Payday loan protections

The Consumer Financial Protection Bureau has a rule in place that prohibits lenders from attempting to collect payments from people’s bank accounts in ways that may rack up excessive fees or deviate from expected agreements.

These protections apply to short-term loans including payday loans and vehicle title loans, as well as long-term balloon payment and high-cost installment loans.

Other consumer protections around payday loans are determined at the state level.

Payday loans and the Military Lending Act

Payday loans are not permitted for active-duty service members and their dependents. Federal protections under the Military Lending Act (MLA) apply to all service members.

How tribal payday lenders skirt state laws

Native American reservations in the U.S. are considered sovereign nations. This means they have sovereign immunity over the state laws in which they preside, so they don’t have to abide by them. Payday lenders take advantage of this loophole by offering online loans off-reservation, enabling them to charge more than 800% APR, with larger loan amounts and longer repayment terms to drag out the process.

Alternatives to payday loans

There are a multitude of alternative options you can turn to besides payday loans, including:

All of these options will have much more favorable loan terms and interest rates than payday loans and should be strongly considered before even thinking about taking out a payday loan.

The bottom line

Payday loans are one of the worst and most damaging forms of predatory lending. The average payday loan has $520 in fees for an initial loan of $375, burying borrowers in debt before they even know what happened. Be wary of the payday loan laws in your state, and always explore alternative options if possible.


Are payday loans legal in Ohio?

Payday loans are legal in Ohio, though there are restrictions in place like a maximum $1000 loan amount, a capped APR at 28%, and you can only have one loan taken out at time.

Does Colorado have any payday loan laws?

Payday loans are legal in Colorado but the loan total is limited to $500 max with a capped 36% APR along with other consumer-friendly laws.

What are the payday loan laws in Illinois?

Illinois restricts payday loans to $1000 per loan (or 25% of gross monthly income) and caps interest rates at 36%. The loan terms are limited to 13 to 120 days.

What is a usury law?

A usury law restricts lenders from charging borrowers with excessively high interest rates on loans.

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