Payday Loans and Cash Advance in Washington

Legal, $700 cap, eight loans a year. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Washington.

Is a Cash Advance Legal in Washington?

Payday loans are legal in Washington, but under some of the tightest rules in the country. Lenders need a check casher license with a small loan endorsement from the Department of Financial Institutions under chapter 31.45 RCW. The 2009 reforms (chapter 510, Laws of 2009) set the current structure: you can borrow no more than $700 or 30 percent of your gross monthly income, whichever is less; the loan cannot run longer than 45 days; the fee is capped at 15 percent of the first $500 and 10 percent of anything above that; and you cannot take more than eight payday loans from all lenders combined in any twelve-month period. Every loan is logged in a statewide database, so the limits are enforced at the counter rather than on the honor system. If you cannot repay on time, you have a legal right to convert the loan into an installment plan at no extra charge. Rollovers are not allowed. For a borrower this means the product exists and is regulated, the cost is fixed by law, and there is a built-in exit if the due date arrives and the money is not there.

The governing law is Revised Code of Washington, Chapter 31.45 (Check Cashers and Sellers), small loan provisions (RCW 31.45.073, 31.45.082, 31.45.084, 31.45.086, 31.45.093, 31.45.210).

Loan Limits and Terms in Washington

The limits work together. The database tells the lender whether you already have a loan out, how many you have had in the last twelve months and whether you are on an installment plan, so the eight-loan cap and the $700 ceiling are enforced in real time across every licensed lender in the state. The fee is a flat percentage of principal rather than interest, and it is the same whether the loan runs seven days or 45. The installment plan right under RCW 31.45.084 is the key backstop: tell the lender before the due date that you cannot pay, and the loan converts to at least 90 days of payments for $400 or less, or 180 days above that, with no added fees. While you are on a plan, no lender may give you another small loan.

What a $300 Loan Costs in Washington

RCW 31.45.073 caps the fee at 15 percent of the first $500 of principal, so the maximum fee on $300 is $300 x 0.15 = $45, and you repay $345 on the due date. Turning the fee into an annual rate: $45 / $300 = 0.15; 0.15 x 365 / 14 = 3.91, or 391 percent APR. The same fee applies whether the loan runs 14 days or the full 45, so a longer term lowers the APR but not the dollar cost. DFI's own consumer page uses the same 391 percent figure for a 14-day loan at the maximum fee.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Washington

• Only a licensee with a small loan endorsement from DFI may make payday loans in Washington, and DFI states that a small loan made by an unlicensed lender cannot be collected.
• You may rescind a payday loan at no charge by returning the principal by the close of business on the next business day, and the lender must hand back your postdated check or electronic authorization (RCW 31.45.086).
• If you tell the lender before the due date that you cannot repay, you have the right to an installment plan of at least 90 days for loans of $400 or less and 180 days for larger loans, with no additional fees or interest (RCW 31.45.084).
• Lenders may not contact you more than three times a week, may not call your workplace more than once a week, may not call your home between 9 p.m. and 7:30 a.m., and may not threaten criminal prosecution over a bounced check (RCW 31.45.082).
• A lender may not make you a new payday loan to pay off an old one, may not lend to you while you are on an installment plan with any licensee, and may not lend to you while you are in default on another small loan (RCW 31.45.073).
• Military borrowers get extra protection: collection must pause during a combat deployment, military pay cannot be garnished, and lenders may not contact a service member's chain of command (RCW 31.45.210).
• Federal law separately caps the annual rate, including most fees, at 36 percent for active-duty service members and their dependents under the Military Lending Act.

Complaints and licence checks go to the Washington State Department of Financial Institutions: 877-746-4334, dfi.wa.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 Washington

Washington applies chapter 31.45 RCW to any lender making small loans to Washington residents, so an online lender needs the same DFI license and small loan endorsement as a storefront and must log its loans in the same statewide database. DFI's position, stated on its consumer page, is that a small loan from an unlicensed lender cannot be collected. The exception it flags is lenders owned by tribal governments, which operate outside DFI's regulation; if you borrow from one, Washington's fee cap, eight-loan limit and installment plan right may not apply, and DFI's ability to help is limited. Before borrowing online, look the company up on DFI's license verification tool or call 877-746-4334, and make sure the agreement discloses the cost as an APR, which state law requires. If an online lender ignores the limits, file a complaint with DFI online, by mail or by email; DFI will confirm it regulates the company and ask it to respond.

Alternatives If a Payday Loan Is Not the Right Fit

Because Washington caps you at eight payday loans a year, plan for what happens on loan nine. Credit unions are the first place to look: federal credit unions may offer payday alternative loans under NCUA rules, from $200 to $1,000 over one to six months or up to $2,000 over up to twelve months, with the rate capped at 28 percent APR and an application fee of no more than $20; no rollovers are allowed. Installment loans from lenders licensed under the Consumer Loan Act (chapter 31.04 RCW) repay over months rather than weeks and are also supervised by DFI; compare the APR on the disclosure before signing. If you already have a payday loan you cannot repay, use the installment plan right in RCW 31.45.084 instead of borrowing elsewhere; it costs nothing extra. Ask your employer about an advance on earned wages, ask utilities and landlords for a payment arrangement, and call 2-1-1 for local emergency assistance programs.

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

Cities We Cover in Washington

• Renton, WALocal 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.
• IdahoThe fee cap, a worked example and the regulator to call in Idaho.