Payday Loans and Cash Advance in Vermont
Prohibited; 18% cap on single-payment loans. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Vermont.
Payday loans are not legal in Vermont. Max amount: No payday product; licensed lender loans have no statutory dollar cap (8 V.S.A. 2230). Max fee: 18% per year on a single-payment loan, about $0.69 per $100 over 14 days (9 V.S.A. 41a(b)(1)). A $300 loan for 14 days costs about $2.07 (18% APR). Regulator: Vermont Department of Financial Regulation, Banking Division, 802-828-3307.
Is a Cash Advance Legal in Vermont?
Payday loans are not legal in Vermont. No statute bans them by name; instead the state's interest rate law makes the product impossible. Under 9 V.S.A. 41a, a lender regulated under Title 8 may charge no more than 18% per year on a single-payment loan, and an installment loan is capped at 24% on the first $1,000 and 12% above that, or 18% overall, whichever is higher. A payday fee of $15 per $100 for two weeks is close to 400% APR, so no licensed lender can offer one. Vermont then closes the back door. Under 8 V.S.A. 2201 nobody may make consumer loans for a charge without a license from the Department of Financial Regulation, 8 V.S.A. 2233 says a loan solicited by mail, phone or the internet to a Vermont resident is covered no matter where it was made, and any loan carrying more than the legal rate cannot be enforced in Vermont. The Consumer Protection Act, in 9 V.S.A. 2481w, makes unlicensed lending, and helping an unlicensed lender move money, an unfair and deceptive act that the Attorney General can prosecute. For a borrower the practical rule is simple: a two-week loan at payday prices is illegal here, and the lender offering it has no right to collect through Vermont courts.
The governing law is Vermont legal rate of interest and Licensed Lenders Act (9 V.S.A. 41a; 8 V.S.A. 2201, 2230 and 2233; 9 V.S.A. 2481w).
Loan Limits and Terms in Vermont
| Rule | VT |
|---|---|
| Maximum amount | No payday product; licensed lender loans have no statutory dollar cap (8 V.S.A. 2230) |
| Maximum term | Not applicable; no payday product |
| Minimum term | Not applicable |
| Maximum fee per $100 | 18% per year on a single-payment loan, about $0.69 per $100 over 14 days (9 V.S.A. 41a(b)(1)) |
| APR on a $300, 14-day loan | 18% APR, the ceiling on single-payment loans from lenders regulated under Title 8 (9 V.S.A. 41a) |
| Rollovers | Not applicable; a loan above the legal rate cannot be enforced in Vermont (8 V.S.A. 2233) |
| Cooling-off period | Not applicable |
| Statewide database | None |
There is no payday product to measure, so the limits above describe the loans a licensed lender may actually make. The 18% ceiling applies to single-payment loans; the 24% and 12% tiers apply to installment loans, with the lender allowed to use 18% on the whole balance if that yields more. Interest is computed by the actuarial method on a 365-day year. 8 V.S.A. 2230 ties every licensed lender to these rates and forbids splitting one loan into several contracts to get around them. No dollar cap, minimum term or rollover rule exists because none is needed; a loan written above the legal rate is unenforceable under 8 V.S.A. 2233, and knowingly collecting more than the legal rate is a crime under 9 V.S.A. 50, with up to $500 or six months in jail for a first offense.
What a $300 Loan Costs in Vermont
| Amount | Term | Fee | You repay | APR |
|---|---|---|---|---|
| $300 | 14 days | $2.07 | $302.07 | 18% |
Vermont has no payday loan, so this shows the cheapest legal single-payment loan from a licensed lender at the 18% ceiling in 9 V.S.A. 41a(b)(1). For $300 over 14 days: 300 x 0.18 x 14 / 365 = $2.07. Checking the APR: 2.07 / 300 x 365 / 14 = 0.18, or 18%. The borrower repays $302.07. An installment loan could run at 24% on the first $1,000, which would cost $2.76 on the same $300 for 14 days; either way the price is a small fraction of a typical payday fee.
Run your own numbers with the cash advance calculator.
Consumer Protections and Who to Call in Vermont
- No person may make loans of money for interest or a finance charge in Vermont without a license from the Commissioner of Financial Regulation under 8 V.S.A. 2201, and the Department's Banking Division can confirm whether a lender is licensed at 802-828-3307.
- 9 V.S.A. 41a caps a single-payment loan at 18% per year and an installment loan at 24% on the first $1,000 and 12% above it, or 18% on the whole balance, whichever is higher, computed by the actuarial method.
- A loan that charges more than the rate allowed by 9 V.S.A. 41a cannot be enforced in Vermont, which means the lender has no right to use Vermont courts to collect it (8 V.S.A. 2233(a)).
- A loan solicited or made by mail, telephone or electronic means to a Vermont resident is subject to Vermont's licensed lender law regardless of where the lender says the loan was made (8 V.S.A. 2233(b)).
- It is an unfair and deceptive act under the Consumer Protection Act for a lender to solicit or make a loan without complying with the licensing chapter, and for payment processors or others to knowingly assist such a lender (9 V.S.A. 2481w).
- Knowingly contracting for or collecting more than the legal rate of interest is a crime under 9 V.S.A. 50: up to $500 or six months in jail for a first offense, up to $1,000 or one year for a repeat offense.
Complaints and licence checks go to the Vermont Department of Financial Regulation, Banking Division: 802-828-3307, dfr.vermont.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 Vermont
Vermont has no payday storefronts, so the whole question is about online lenders. The law reaches them directly. 8 V.S.A. 2233(b) says nobody may solicit or make loans by mail, telephone or electronic means to Vermont residents without a license, and that such a loan is governed by Vermont law no matter where the lender claims it was made. 9 V.S.A. 2481w goes further: an unlicensed lender's loans are unfair and deceptive acts, and so is processing payments for that lender or otherwise giving it substantial assistance, which is aimed squarely at the banks and payment companies that move money for out-of-state and tribal-affiliated websites. The Attorney General's Illegal Lending page documents settlements with unlicensed online lenders that returned about $1,253,282 to 6,740 Vermont consumers. If a website offers you a loan above 18% or 24%, ask the Banking Division at 802-828-3307 whether the lender is licensed, keep the documents, and report it to the Department or to the Attorney General's Consumer Assistance Program.
Alternatives If a Payday Loan Is Not the Right Fit
The legal small-dollar loan in Vermont is an installment loan from a licensed lender under 8 V.S.A. chapter 73, priced at no more than 24% on the first $1,000 and 12% above that, or 18% overall, under 9 V.S.A. 41a. Vermont banks and credit unions, which are exempt from the licensing chapter but not from the rate law, offer small personal loans and lines of credit, and credit unions can offer payday alternative loans under federal rules. A credit card cash advance is expensive by Vermont standards but still legal and far cheaper than an illegal online payday loan. Beyond credit, ask your employer about a pay advance, ask the utility, landlord or medical provider you owe for a written payment plan, and contact local community action agencies for help with heating, rent and food. If you already took an illegal online loan, contact the Attorney General's Consumer Assistance Program before paying more.
Compare the installment loan and payday alternative loan options before you decide.
Frequently Asked Questions
Are payday loans legal in Vermont?
No. Vermont caps a single-payment loan from a regulated lender at 18% per year under 9 V.S.A. 41a, which rules out payday pricing, and 8 V.S.A. 2201 requires every consumer lender to be licensed by the Department of Financial Regulation. A loan written above the legal rate cannot be enforced in Vermont under 8 V.S.A. 2233, so the lender cannot collect through state courts.
Do I have to repay an illegal payday loan in Vermont?
8 V.S.A. 2233(a) says a loan that charges more than the rate allowed by 9 V.S.A. 41a shall not be enforced in this State, so the lender cannot use Vermont courts to collect. Before you stop paying, keep every document and contact the Attorney General's Consumer Assistance Program or the Department's Banking Division at 802-828-3307, since lenders sometimes continue to debit accounts anyway.
What is the maximum interest rate on a personal loan in Vermont?
For lenders regulated under Title 8, 9 V.S.A. 41a sets 18% per year on a single-payment loan and, on an installment loan, 24% on the first $1,000 and 12% on the balance above that, or 18% on the whole loan if that is higher. Interest is figured by the actuarial method on a 365-day year, and 8 V.S.A. 2230 binds every licensed lender to those rates.
Can an online or tribal lender legally lend to Vermont residents?
Only with a Vermont license and at Vermont rates. 8 V.S.A. 2233(b) applies the licensed lender law to any loan solicited or made by mail, phone or electronic means to a Vermont resident, wherever the lender says it is based. 9 V.S.A. 2481w makes unlicensed lending, and processing payments for an unlicensed lender, an unfair and deceptive act the Attorney General can pursue.
Where do I report an illegal lender in Vermont?
File a banking complaint with the Department of Financial Regulation online or by calling the Banking Division at 802-828-3307, and report the lender to the Attorney General's Consumer Assistance Program, which has recovered refunds from unlicensed online lenders. Keep the loan agreement, bank statements and any messages from the lender; they are the evidence both offices will ask for.
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