Washington D.C. Payday Loans

Amended D.C. Code Ann. 28-3301(a)
Status: Prohibited

Payday loans are prohibited in Washington DC, pursuant to Amended D.C. Code Ann. 28-3301(a) and 26-319.

Payday Loan Lending Laws in Washington DC

By law, payday loans are not allowed in the District of Columbia due to strong usury laws that cap interest on loans. Lenders in Washington DC must possess a license to deposit checks into someone's account and the state sets a minimum fee for cashing a post-dated check. Why are they illegal here? Mostly due to the usury laws enacted in various parts of the U.S. since 2010. In the last decade, lawmakers have been pushing back harder on the potential abuses of payday lending. As a result, there are more than 14 states that no longer allow payday lenders to physically operate inside their borders.

What is a payday loan?

Payday loans are short-term financial loans, usually between $100 to $500, that have to be paid back to the lender within a short time frame. The typical repayment time frame is two weeks and tend to coincide with most standard two-week pay periods, giving the loan its unique name. Payday loans have become popular in other states in recent years, mostly due to the easy application process and the simple requirements to apply. Unlike traditional loans through banks and creditors, a potential borrower does not need to produce collateral or have a good credit rating to apply for a payday loan. Furthermore, depending on the state in question, a borrower might be able to take out multiple loans with different lenders.

The ease of the application process, coupled with the lack of requirements as to how a borrower can use the loaned funds, adds to the popularity of cash advance loans. If a borrower needs to pay the water bill before their next paycheck, a short term loan can help them cover the bill and repay the lender in the next pay cycle. Should a borrower need to address unexpected financial emergencies, such as car trouble or a doctor’s visit, a payday loan can help them there, too.

Loan Options

While cash advance loan centers cannot operate physically in Washington DC, residents in need of a loan do have other options. A potential borrower should first consider every type of loan option available to them, from friends and family to traditional bank loans. If none of these options are available, the borrower can consider applying for a loan over the internet. State regulations prohibit a lender from operating in state but cannot stop a resident from applying for a loan with a company in a different state. This is a method similar to how credit card companies operate, as most card holders have accounts outside their own state. There are numerous websites and online resources that a Washington DC resident can use to locate and apply for such loans, but great care should be taken in doing so.

Lending Rules*

Lenders in the state of Washington D.C. are legally required to comply by the following limitations according to Amended D.C. Code Ann. 28-3301(a):

Small Loan Rate Cap:
24% per year
*The information displayed may not be current. For the most recent information, please visit http://www.paydayloaninfo.org/state-information/16.

Regulatory Information

If you have a complaint against a Washington D.C. Cash Advance location you can contact your state regulator below:

Regulator:
D. C. Department of Insurance, Securities and Banking
Address:
810 First Street, NE Suite 701 Washington DC 20002
Phone:
(202) 727-8000
Fax:
202-535-1194
Website:


Washington D.C. Check Cashers

Below you can find Washington D.C. check cashers in the following cities:

Washington D.C. Statistics**

The following information is key demographic data for the state of Washington D.C. from the Census bureau.

Total Population:
681,170
Median Household Income:
$70,848
Poverty Rate:
17.3%
Median Gross Rent:
$1,327
High School Graduate or Higher:
89.3%
Bachelor's Degree or Higher:
54.6%
**The information displayed may not be current. For the most recent information, please visit http://www.census.gov/quickfacts.

Borrow Responsibly

The best way to use any short-term loan should be to address short-term financial emergencies that can be paid back in a short amount of time. However, the very nature of emergency situations can make it difficult for a potential borrower to do the proper research and ask the right questions about a payday loan before agreeing to the terms. In that regard, Washington DC law can be both a blessing and a curse: in-state prohibitions force a potential borrower to put in the work of finding the right lender, but financial pressure can make such work stressful and does not guarantee a borrower will make the best choice. Short-term loans should never be used for long-term financial planning or anything other than an emergency situation; doing otherwise can put the borrower in a financial situation that can prove very difficult to escape.

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