Payday Loans and Cash Advance in South Dakota

Legal, capped at 36% all-in APR. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in South Dakota.

Is a Cash Advance Legal in South Dakota?

Payday loans are legal in South Dakota but capped so tightly that the traditional product has disappeared. Payday and other short-term lenders are licensed as money lenders under S.D. Codified Laws chapter 54-4. On November 8, 2016, voters approved Initiated Measure 21, and for every loan originated, refinanced, rolled over or renewed after November 15, 2016, S.D. Codified Laws 54-4-44 bars a licensee from contracting for or receiving finance charges above an annual rate of 36%, counting every charge for ancillary products and every other fee incident to the extension of credit. A violation is a Class 1 misdemeanor, and a loan made in violation is void and uncollectible as to principal, fees and interest. The older payday rules still sit on the books: S.D. Codified Laws 54-4-66 caps a payday loan at $500 per borrower per licensee, and 54-4-65 limits renewals to four, each requiring a 10% paydown of the original principal. For a borrower the meaning is that any lender, storefront or online, charging more than 36% all-in on a consumer loan is breaking South Dakota law and cannot legally collect a cent, and that small-dollar credit now comes from licensees, banks and credit unions at installment-loan prices.

The governing law is South Dakota Money Lending Licenses Act (S.D. Codified Laws 54-4-44, 54-4-44.1, 54-4-65 and 54-4-66).

Loan Limits and Terms in South Dakota

The 36% ceiling is all-in: interest, fees, credit insurance, memberships and any other charge incident to the extension of credit all count toward it. S.D. Codified Laws 54-4-44.3 carves out late fees, returned check fees and attorney's fees incurred after default, so read the default section of any contract carefully. 54-4-44.1 blocks the usual workarounds, naming sale-leaseback deals, cash rebates on pretextual installment sales, and loans arranged by mail, telephone, internet or any electronic means regardless of whether the lender has a physical location in the state. The payday-specific sections cap principal at $500 for all payday loans a licensee has out to one borrower and allow no more than four renewals, each conditioned on paying fees due and cutting principal by at least 10% of the original amount.

What a $300 Loan Costs in South Dakota

South Dakota caps all charges on a money lender loan at 36% per year (S.D. Codified Laws 54-4-44), so the cost of a short-term loan is plain interest for the days borrowed. For $300 over 14 days: 300 x 0.36 x 14 / 365 = $4.14. Checking the APR: 4.14 / 300 x 365 / 14 = 0.36, or 36%. The borrower repays $304.14. Any lender quoting a flat fee per $100 that pushes the annual rate above 36% is quoting a loan the statute declares void and uncollectible.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in South Dakota

• Every money lender location must hold its own license from the South Dakota Division of Banking, issued through the Nationwide Multistate Licensing System; licenses expire December 31 each year and must be renewed.
• No licensee may contract for or receive finance charges above an annual rate of 36%, including charges for ancillary products and any other fee incident to the extension of credit (S.D. Codified Laws 54-4-44).
• A loan that violates the 36% cap is void and uncollectible as to any principal, fee, interest or charge, and making it is a Class 1 misdemeanor (S.D. Codified Laws 54-4-44).
• Lenders may not use a device, subterfuge or pretense to evade the cap, and the rule reaches loans arranged by mail, telephone, internet or any electronic means whether or not the lender has a physical location in South Dakota (S.D. Codified Laws 54-4-44.1).
• A payday loan, or all payday loans from one licensee to one borrower, may not exceed $500 in principal at any time, and violating that limit is a Class 1 misdemeanor (S.D. Codified Laws 54-4-66).
• A short-term consumer loan may be renewed, rolled over or flipped no more than four times, and each renewal requires the borrower to pay fees due and reduce principal by at least 10% of the original amount (S.D. Codified Laws 54-4-65).
• Active-duty service members and their dependents are also covered by the federal Military Lending Act, which caps the military annual percentage rate on payday loans at 36%.

Complaints and licence checks go to the South Dakota Division of Banking: 605-773-3421, dlr.sd.gov/banking/money_lenders/default.aspx, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in South Dakota

South Dakota wrote the internet into its rate cap. S.D. Codified Laws 54-4-44.1 says no person may make, offer, assist or arrange a loan above the permitted rate by mail, telephone, internet or any electronic means, regardless of whether the person has a physical location in the state, and the Division of Banking's guidance on Initiated Measure 21 applies the cap to every loan originated, refinanced, rolled over or renewed after November 15, 2016. So an out-of-state website charging South Dakota residents 300% or 400% APR is making a loan the statute calls void and uncollectible. Banks, bank holding companies, federally insured institutions and state-chartered trust companies are outside chapter 54-4, which is why some online lenders route loans through a partner bank; the Division's guidance does not address those arrangements, so treat any rate above 36% as a red flag and ask questions before you sign. Complaints against Division-regulated institutions are filed online through the Division's consumer page, and the Division can be reached at 605-773-3421.

Alternatives If a Payday Loan Is Not the Right Fit

The legal small-dollar loan in South Dakota is an installment loan from a licensed money lender at no more than 36% all-in, repaid over a set number of months, which is the definition of an installment loan in S.D. Codified Laws 54-4-36. A short-term loan of six months or less from the same licensees is also legal at the same cap, up to $500 if it is structured as a payday loan. Banks and credit unions are exempt from chapter 54-4 and set their own terms for small personal loans and lines of credit, and credit unions can offer payday alternative loans under federal rules. A credit card cash advance is legal and, at South Dakota's cap, roughly comparable in cost to a licensed loan. Outside of credit, ask your employer about a pay advance and ask the creditor you owe for a written payment plan; a void loan from an unlicensed website is never the cheaper option.

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

Frequently Asked Questions

Nearby States

• North DakotaThe fee cap, a worked example and the regulator to call in North Dakota.
• MinnesotaThe fee cap, a worked example and the regulator to call in Minnesota.
• IowaThe fee cap, a worked example and the regulator to call in Iowa.
• NebraskaThe fee cap, a worked example and the regulator to call in Nebraska.
• WyomingThe fee cap, a worked example and the regulator to call in Wyoming.
• MontanaThe fee cap, a worked example and the regulator to call in Montana.