Payday Loans and Cash Advance in West Virginia

Prohibited; 31% small loan rate cap. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in West Virginia.

Is a Cash Advance Legal in West Virginia?

Payday loans are not legal in West Virginia, and they never have been in the storefront form common elsewhere. The state has no payday statute. Two laws close the door. The West Virginia Consumer Credit and Protection Act caps what a regulated consumer lender may charge: under section 46A-4-107 the finance charge on an unsecured loan of $3,500 or less may not exceed 31 percent a year by the actuarial method, with a nonrefundable processing fee of no more than 2 percent of the amount financed. A typical payday fee of $15 per $100 for two weeks is roughly 390 percent, so no licensed lender can offer it. The Check Cashing Act then blocks the workaround: section 32A-3-1 forbids merchants and licensed check cashers from agreeing to hold a check for later deposit for the purpose of providing a loan and deriving profit from it. That is the deferred deposit model, and it is prohibited. The Division of Financial Institutions charters and examines regulated consumer lenders, and the Attorney General's Consumer Protection Division takes complaints about internet lenders who ignore the cap. For a borrower the practical rule is that any payday loan offered to you in West Virginia is illegal, and the Attorney General wants to hear about it.

The governing law is West Virginia Consumer Credit and Protection Act, Chapter 46A, Article 4 (regulated consumer lenders); Check Cashing Act, Chapter 32A, Article 3 (W. Va. Code 46A-4-107; W. Va. Code 32A-3-1).

Loan Limits and Terms in West Virginia

West Virginia's ceiling is a rate, not a fee, and it is measured by the actuarial method, which means a two-week loan earns only two weeks of interest. Section 46A-4-107 sets 31 percent a year on unsecured loans of $3,500 or less, 27 percent on loans from $3,500 to $15,000 or loans secured by real property, and 18 percent above $15,000. A regulated consumer lender may add a nonrefundable processing fee of up to 2 percent of the amount financed on small unsecured loans, which on $300 is $6. The deferred deposit route is closed separately by 32A-3-1, which bars check cashers and merchants from holding a check to make a loan for profit. There is no payday license, no database and no renewal rule because there is no product to regulate; the enforcement question is entirely about lenders who ignore the cap.

What a $300 Loan Costs in West Virginia

There is no payday loan in West Virginia, so this shows the cheapest legal small loan: a regulated consumer lender loan at the 46A-4-107 cap of 31 percent a year on unsecured balances of $3,500 or less. Interest on $300 for 14 days is $300 x 0.31 x 14 / 365 = $3.57, repaid as $303.57. APR from the fee: $3.57 / $300 = 0.0119; 0.0119 x 365 / 14 = 0.31, or 31 percent. A lender may also take a processing fee of up to 2 percent of the amount financed, $6 here, which would bring the two-week cost to $9.57; these loans are normally repaid in installments over months.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in West Virginia

• Regulated consumer lenders must be licensed by the Division of Financial Institutions, which examines them and accepts written complaints by mail at 900 Pennsylvania Avenue, Suite 306, Charleston, WV 25302, or by phone at 304-558-2294.
• The finance charge on an unsecured consumer loan of $3,500 or less is capped at 31 percent a year by the actuarial method, and all charges must be included in that calculation (W. Va. Code 46A-4-107).
• Check cashers and merchants may not agree to hold a check for later deposit in order to provide a loan and profit from it, which prohibits the deferred deposit model that payday lenders use elsewhere (W. Va. Code 32A-3-1).
• The Attorney General's Consumer Protection Division takes complaints about lenders that ignore the rate cap through its hotline at 800-368-8808, online, by email or by mail, and mediates with the business.
• Origination, points and investigation fees on larger loans are capped at 2 percent of the amount financed, and at 5 percent for real estate secured loans, so fees cannot be used to get around the rate cap (W. Va. Code 46A-4-107).
• Federal law caps the annual rate at 36 percent, including most fees, for active-duty service members and their dependents under the Military Lending Act.

Complaints and licence checks go to the West Virginia Division of Financial Institutions: 304-558-2294, dfi.wv.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 West Virginia

No storefront in West Virginia offers payday loans, so every payday loan pitched to a West Virginia resident comes through the internet, and every one of them exceeds the 31 percent cap in 46A-4-107. The lenders are typically based in other states, offshore, or affiliated with tribal governments and claim that West Virginia law does not reach them. The Division of Financial Institutions handles complaints against the regulated consumer lenders it charters; for an unlicensed online lender the Attorney General's Consumer Protection Division is the right office, reachable at 800-368-8808, online, by email at [email protected] or by mail to PO Box 1789, Charleston, WV 25326. Before borrowing from any website, check whether it holds a West Virginia consumer lender license and whether the disclosed APR is 31 percent or less on a loan of $3,500 or under. If a lender you cannot verify is debiting your account, keep the agreement and bank records, file with the Attorney General and the Consumer Financial Protection Bureau, and ask your bank about stopping the payments.

Alternatives If a Payday Loan Is Not the Right Fit

The legal small-dollar loan in West Virginia is a regulated consumer lender loan at no more than 31 percent a year on unsecured amounts of $3,500 or less, repaid in installments, with a processing fee of up to 2 percent. Federal credit unions may offer payday alternative loans under NCUA rules: $200 to $1,000 over one to six months, or up to $2,000 over up to twelve months, at no more than 28 percent APR with an application fee of at most $20 and no rollovers. Banks and credit unions can also make small personal loans and lines of credit under their own regulators. Pawn loans exist but leave you without the item until you repay. Ask your employer about an advance on wages you have already earned, ask the utility, landlord or hospital for a payment plan, and call 2-1-1 West Virginia for referrals to emergency assistance. None of these will be as fast as a website promising money in an hour, but all of them are legal and far cheaper.

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

Frequently Asked Questions

Nearby States

• OhioThe fee cap, a worked example and the regulator to call in Ohio.
• PennsylvaniaThe fee cap, a worked example and the regulator to call in Pennsylvania.
• MarylandThe fee cap, a worked example and the regulator to call in Maryland.
• VirginiaThe fee cap, a worked example and the regulator to call in Virginia.
• KentuckyThe fee cap, a worked example and the regulator to call in Kentucky.