High-interest payday loans are prohibited in Maryland, and rates on short-term loans are restricted based on the loan’s size. If an individual or business is lending $25,000 or less, it’s illegal for them to charge more than the interest rate allowed by law — subject to certain (unspecified) exceptions, according to the Maryland Department of Labor’s Office of Financial Regulation.
Here’s a breakdown of the maximum interest rate a small loan provider can charge:
| Loan amount | Max interest per month | Max interest per year |
|---|---|---|
First $1,000 of $2,000 loan | 2.75% | 33% |
Next $1,000 of $2,000 loan | 2% | 24% |
Loans over $2,000 | 2% | 24% |
However, payday lenders often find ways around state regulations. A simple internet search for “payday loans in Maryland” reveals dozens of lenders that claim to offer payday loans in Maryland. Some may or may not be legit lenders that follow state laws. For that reason, Finder urges borrowers to make sure they understand the rates and fees they’re paying before taking out any type of loan.
If you believe a lender is violating Maryland lending laws, you can file a complaint with the Office of Financial Regulation.
If you need a loan, here are some better, less expensive options than payday loans.
If you need quick cash between paychecks, a cash advance app might be a good option. Loan amounts are small — typically between about $20 to $500 — and most providers don’t charge interest or late fees, making them less expensive than payday loans. But they’re not free.
Many apps charge monthly subscription fees that may cost up to $15, although some apps don’t require a membership to qualify. And, while transfers are usually free, they take up to a few days to go through. If you need cash now, you’ll have to pay a fast transfer fee anywhere from around $2 to $20.
Cash advance apps are also a solid choice if you have poor credit, because they don’t require credit checks. But you need to link your bank account with the app, and most providers require you to get paid by direct deposit. Plus, advance amounts usually start small for new users, although they generally increase the more you use the app.
If you need to borrow a larger amount than payday lenders offer — or want a longer term to pay it back — a personal loan might be the way to go. Personal loans can reach as high as $50,000, and a few lenders, like Lightstream and SoFi, offer as much as $100,000.
You can get personal loans from banks, credit unions and online lenders, and you may want to check with your current bank or credit union first. These loans can typically be used for almost any purpose, such as consolidating debt, covering emergency expenses or making home improvements. Most lenders require a credit score of at least 600 or more to qualify, but there are also loan options for borrowers with bad credit.
Some federal credit unions offer payday alternative loans, which are specifically designed to give low-income borrowers access to more affordable credit than payday loans, title loans and other types of expensive short-term loans. Loan amounts range from $200 to $1,000, with terms from one to six months and interest rates capped at 28%.
But you need to be a member for at least one month to qualify for a PAL, so it isn’t a good option in an emergency. However, some credit unions may offer the less common PALs II loans, which go up to $2,000 and have terms as long as 12 months. You may be eligible for a PALs II as soon as you become a member.
If you’re in a bad financial situation, your employer may be willing to give you an advance on your next paycheck. That way, you can access money now — that you’ve already earned — instead of waiting for payday. This could be an informal situation where your boss gives you cash ahead of time, or some companies offer loans or cash advances as an employee benefit.
Maryland has a number of assistance programs you might qualify for if you’re struggling with your finances.
You can explore more resources by visiting the Maryland Department of Human Services.
Maryland doesn’t technically ban small-dollar loans, but it limits the interest a lender can charge. For a personal loan over $2,000, the maximum interest rate is 2% per month or 24% per year. However, several factors impact the interest you pay, like your credit score, the amount you borrow, the lender and the loan term.
If you go with an online lender, you can expect to pay between 5.99% and 35.99%, with the lowest rates going to borrowers with good to excellent credit. You may also have to pay additional fees, such as application or origination fees. Like interest rates, these vary by lender. Check your loan agreement to learn the full details of what you might have to pay before you borrow.
While you may not be able to take out a payday loan in Maryland, there are other options to help you make ends meet. And if you’re still looking for a short-term loan, there are some installment loan options you may want to consider if you’re facing an emergency expense.
If possible, borrowing from a friend or family member is your best alternative to getting a pricey payday loan. If that isn’t an option and you only need a small loan, you may want to try a cash advance app. If you need more, a personal loan might be a better solution.
If you exhausted all your options, you could try a pawn shop. If you have something of value, you can either sell it outright or take out a loan. Pawn brokers typically loan you about 25% to 60% of your item’s value. Pawn shop loans aren’t cheap, but there’s no credit check, and they’re easy to get.
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I took out a payday online loan in Maryland. I stopped paying because the interest was too high. I attempted to settle but they did not accept. After going back and forth they offer me a settlement of 15%. Can they come back and sue me for the 85% of the remaining balance thur another collection agency?
Hi Angela,
Thanks for your inquiry.
Debt collectors acting on behalf of companies to recover late payments. You may not recognize them at first because they don’t operate under the name of the company you owe money to. If you’ve missed payments or a creditor’s records make it appear as if you have, a debt collector may contact you.
We do have a guide about getting out of debt. You may want to check this guide and learn more about how to deal with debt collectors and to start your way to financial freedom.
Hope this information helps
Cheers,
Arnold