Payday Loans and Cash Advance in California

Legal, capped at $300 and a 15% fee. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in California.

Is a Cash Advance Legal in California?

Payday loans are legal in California, but the state keeps them small. The governing law is the California Deferred Deposit Transaction Law, part of the Financial Code, and it calls the product a deferred deposit transaction: you write a personal check, the lender holds it, and you get cash now. Under Financial Code section 23035 the check you write cannot be for more than $300, and the lender can hold it for no more than 31 days. Section 23036 caps the fee at 15 percent of the face of the check, which is $45 on a $300 check, so the most you can actually walk out with is $255. The Department of Financial Protection and Innovation (DFPI) licenses every payday lender and publishes a consumer advisory that spells out these limits. What it means for you: a California payday loan is cheap in dollars compared with most states, but the cost over two weeks still works out to an annual rate above 400 percent, and the law does not let a lender roll the loan over or lend to you while another payday loan is still open. Larger installment loans between $2,500 and $10,000 have been capped at 36 percent plus the federal funds rate since January 1, 2020.

The governing law is California Deferred Deposit Transaction Law, Financial Code sections 23000 to 23106 (Cal. Fin. Code 23035, 23036, 23037; Cal. Fin. Code 22303, 22304.5).

Loan Limits and Terms in California

The $300 limit is on the check, not on the cash. A lender that charges the full 15 percent fee gives you $255 and deposits a $300 check on the due date. Because the fee is a flat percentage, a shorter loan costs the same in dollars but far more in annual terms. Section 23036 lets a lender give you an extension or a payment plan, but it may not charge anything extra for doing so. Section 23037 bars collateral, bars taking more than one check for a single transaction, and bars any unfair or deceptive conduct. If your check bounces the lender may charge one returned check fee of up to $15 and nothing more. Cities do not add their own payday rules in California; the state law is the whole framework.

What a $255 Loan Costs in California

This is the largest transaction the law allows. Financial Code 23036 caps the fee at 15 percent of the check's face amount, and 23035 caps the face amount at $300, so the fee is $300 x 0.15 = $45 and the cash you receive is $300 - $45 = $255. Two weeks later the lender deposits the $300 check. APR = fee / amount received x 365 / days = 45 / 255 x 365 / 14 = 4.60, or about 460 percent. The DFPI's own advisory describes the same $300 check, $45 fee, $255 cash example.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in California

• Every payday lender must hold a DFPI license under the Deferred Deposit Transaction Law, and the DFPI advisory tells borrowers to check the license before signing anything.
• The fee is capped at 15 percent of the check's face amount and the check itself is capped at $300, so the most any licensed lender can charge on one loan is $45 (Fin. Code 23035 and 23036).
• You cannot be prosecuted or threatened with prosecution if the check bounces; section 23035 requires the written agreement to say so in plain terms.
• A lender may not take collateral, may not accept more than one check for a single loan, and may not let you pay off one payday loan with the proceeds of another (Fin. Code 23037).
• A lender may not give you a new payday loan while you still have one outstanding, according to the DFPI consumer advisory.
• If you need more time, the lender may extend the due date or set up a payment plan but may not charge any additional fee for it (Fin. Code 23036).
• Only one returned check fee, capped at $15, may be charged if your check is dishonored (Fin. Code 23036).

Complaints and licence checks go to the California Department of Financial Protection and Innovation (DFPI): 866-275-2677, dfpi.ca.gov, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in California

An online lender that makes deferred deposit loans to California residents needs the same DFPI license as a storefront, and the same $300, 15 percent and 31 day limits apply. The DFPI's advisory tells borrowers to confirm a license before handing over bank details, and its complaint line takes reports about unlicensed lenders. Out-of-state and tribal lenders still advertise to Californians, often at fees well above the state cap, and a loan from an unlicensed lender is not something the DFPI can supervise for you. The practical test is simple: if the website will not show a California DFPI license number, or the fee on a $300 check is more than $45, it is not operating under California law. Storefronts remain common in the state, but the license and the caps are identical for both channels, so the main difference is convenience, not cost.

Alternatives If a Payday Loan Is Not the Right Fit

California has a second tier of regulated small loans under the California Financing Law. Loans under $2,500 from a licensed finance lender are subject to the tiered monthly rate caps in Financial Code 22303: 2.5 percent a month on the first $225, 2 percent on the portion from $225 to $900, 1.5 percent from $900 to $1,650 and 1 percent from $1,650 to $2,500. Loans of $2,500 up to $10,000 are capped at 36 percent plus the federal funds rate under section 22304.5, a change made by the Fair Access to Credit Act that took effect January 1, 2020. Beyond state products, federal credit unions can offer Payday Alternative Loans, many employers offer earned wage access or a payroll advance, and county social services offices handle emergency assistance for rent and utilities. If the need is a bill, calling the biller for a payment plan is usually cheaper than any of the above.

Compare the installment loan and payday alternative loan options before you decide.

Cities We Cover in California

• Bakersfield, CALocal cost of living, ordinances and help lines
• Fresno, CALocal cost of living, ordinances and help lines
• Los Angeles, CALocal cost of living, ordinances and help lines
• Modesto, CALocal cost of living, ordinances and help lines
• Oxnard, CALocal cost of living, ordinances and help lines
• Sacramento, CALocal cost of living, ordinances and help lines
• Stockton, CALocal cost of living, ordinances and help lines

Frequently Asked Questions

Nearby States

• OregonThe fee cap, a worked example and the regulator to call in Oregon.
• NevadaThe fee cap, a worked example and the regulator to call in Nevada.
• ArizonaThe fee cap, a worked example and the regulator to call in Arizona.