Payday Loans and Cash Advance in New Jersey

Prohibited; 30% criminal usury ceiling. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in New Jersey.

Is a Cash Advance Legal in New Jersey?

Payday loans are not legal in New Jersey. The state never wrote a payday statute; instead two older laws make the product impossible to offer lawfully. The criminal usury statute, N.J.S.A. 2C:21-19, says that any rate above 30 percent a year on a loan to an individual is not a rate authorized by law, and charging it is a crime, with the most serious grading reserved for rates above 50 percent and for anyone in the business of making such loans. The Check Cashers Regulatory Act of 1993, N.J.S.A. 17:15A-47, forbids a licensed check casher from cashing or advancing money on a postdated check, which is the mechanism a storefront payday loan runs on. The civil usury statute, N.J.S.A. 31:1-1, sets the default ceiling at 6 percent, or 16 percent with a written contract, for ordinary lenders. Consumer lenders licensed by the Department of Banking and Insurance under Title 17, Chapter 11C can charge more than 16 percent, but the 30 percent criminal limit still applies to them. For a borrower, the result is simple: no storefront in New Jersey can legally hold your check for a fee, and any online lender charging payday-style rates is charging a rate the state calls criminal.

The governing law is New Jersey criminal usury statute, N.J.S.A. 2C:21-19; Check Cashers Regulatory Act, N.J.S.A. 17:15A-47; civil usury statute, N.J.S.A. 31:1-1; Consumer Lender licensing, N.J.S.A. 17:11C-3 (N.J.S.A. 2C:21-19; N.J.S.A. 17:15A-47; N.J.S.A. 31:1-1; N.J.S.A. 17:11C-3).

Loan Limits and Terms in New Jersey

New Jersey closes both doors a payday lender would use. A storefront cannot take a postdated check because 17:15A-47 bars check cashers from cashing or advancing money on one, with the only exceptions being government and payroll checks payable the next banking day. A lender of any kind cannot price the loan the way payday loans are priced because 2C:21-19 makes anything above 30 percent a year criminal usury for an individual borrower. The grading matters: rates above 50 percent are a second-degree crime, rates between 30 and 50 percent on a loan over $1,000 to a person are a third-degree crime, and being in the business of criminal usury is a second-degree crime with a fine of up to $250,000. Licensed consumer lenders operate under Title 17, Chapter 11C and must hold a Department of Banking and Insurance license, which you can verify before borrowing.

What a $300 Loan Costs in New Jersey

Payday loans are prohibited, so this example prices a $300 loan at the highest rate any lender may lawfully charge an individual in New Jersey: 30 percent a year, the criminal usury ceiling in N.J.S.A. 2C:21-19. Interest for 14 days: $300 x 0.30 x 14 / 365 = $3.45, repaid as $303.45. APR = 3.45 / 300 x 365 / 14 = 0.30, or 30 percent. An unlicensed lender is limited further, to 16 percent by written contract under N.J.S.A. 31:1-1, which would be $1.84 on the same loan.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in New Jersey

• Charging an individual more than 30 percent a year on a loan is criminal usury under N.J.S.A. 2C:21-19; above 50 percent it is a second-degree crime, and running a business that makes such loans is a second-degree crime with a fine of up to $250,000.
• A licensed check casher may not cash or advance money on a postdated check, except a government or payroll check payable the next banking day, so the classic hold-my-check payday loan cannot be made in a New Jersey storefront (N.J.S.A. 17:15A-47).
• A check casher may not run a loan business alongside its check-cashing operation (N.J.S.A. 17:15A-47).
• Without a written contract the legal rate of interest is 6 percent, and with one it is 16 percent, for lenders that are not licensed under a more specific statute (N.J.S.A. 31:1-1).
• Anyone in the business of making consumer loans must hold a license from the Department of Banking and Insurance under N.J.S.A. 17:11C-3, and the Department publishes licensee lookups so you can confirm it.
• The Department's Consumer Inquiry and Response Center takes complaints about lenders by phone at 800-446-7467 on weekdays from 8:30 a.m. to 5 p.m., online, or by mailing its banking complaint form.
• The federal Military Lending Act caps consumer credit to active-duty service members and their dependents at a 36 percent all-in rate regardless of state law.

Complaints and licence checks go to the New Jersey Department of Banking and Insurance: 800-446-7467, www.nj.gov/dobi, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in New Jersey

There are no legal payday storefronts in New Jersey, so every payday offer a resident sees arrives online or by phone. Those lenders fall into two groups. Some hold a New Jersey consumer lender license and price within the 30 percent ceiling, in which case they are not really payday lenders at all but small installment lenders. The rest are out-of-state or tribal websites that do not hold a New Jersey license and charge fees that annualize to several hundred percent. The state's position is that the criminal usury statute applies to loans made to New Jersey residents regardless of where the lender sits, and the Department of Banking and Insurance directs consumers to check licensing before borrowing and to report unlicensed lenders. A loan at 400 percent from a website is a loan at a rate New Jersey treats as a crime; that does not make the money disappear from your account, but it does mean the lender is operating outside any protection the state can enforce for you. Never give bank login details to a lender you cannot find in the Department's licensee search.

Alternatives If a Payday Loan Is Not the Right Fit

The lawful small-dollar option in New Jersey is a loan from a consumer lender licensed by the Department of Banking and Insurance under Title 17, Chapter 11C, priced at no more than the 30 percent criminal usury ceiling. Banks and credit unions lend under their own charters, and federal credit unions can offer Payday Alternative Loans with federal caps. A credit card cash advance, although not cheap, sits far below anything a payday lender charges. Employer payroll advances and earned wage access avoid a loan entirely. For a bill you cannot cover, the New Jersey Department of Human Services runs emergency assistance through county welfare agencies, NJ 2-1-1 connects residents with utility, rent and food programs, and most utilities offer payment arrangements if you call before the shutoff notice. Because every legal product in the state is capped at 30 percent or less, the cheapest move is usually to ask the creditor for time.

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

Frequently Asked Questions

Nearby States

• New YorkThe fee cap, a worked example and the regulator to call in New York.
• PennsylvaniaThe fee cap, a worked example and the regulator to call in Pennsylvania.
• DelawareThe fee cap, a worked example and the regulator to call in Delaware.