Payday Loans: California Law

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Based in California? Are you aware of the California payday loan laws?

Did you know that California has payday loan laws? If you reside in the state of California, your loan is likely impacted by California law. Every state has different payday loan laws and California is no exception! As a borrower, it is best to be informed on payday loans and California law. Keep reading! 

Palm trees, gorgeous beaches, and not to mention the awe-worthy weather, Californians sure have it all. From Hollywood to Silicon Valley, this remarkable state has something for everyone. However, even residents of sunny California can’t escape money woes that plague the rest of the country. 

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With cost of living being 42% higher than the national average, the average Californian often struggles to keep up with bills, let alone tackle an emergency expense. Rising inflation doesn’t help either. As such, several individuals and families rely on personal loans to get by in times of financial emergencies. There is no shame in needing help and there are personal loan agencies that provide funds.  

Once you’re able identify a legit and licensed direct lender, the next step is to submit an application. Lenders like us are quick to get a decision to you, and if approved, you can get funds quickly. It is a very simple process that doesn’t require a hard credit check. Read up on what to expect when you apply for a payday loan in California. 

California online personal loans are just convenient. We have plenty of customers who can attest to that.

5-star review says: This company has been awesome in terms of speed and personal customer service - Doc. Blue-green ombre background bears the Net Pay Advance brand name and logo at the top while at the bottom, there is the Trustpilot brand name and logo.
5-star review says: Awesome customer service! Always prompt. If I’m late on my payment, they work with me - Caludia. Blue-green ombre background bears the Net Pay Advance brand name and logo at the top while at the bottom, there is the Trustpilot brand name and logo.
5-star review says: Very satisfying and easy to apply fast - Virginia. Blue-green ombre background bears the Net Pay Advance brand name and logo at the top while at the bottom, there is the Trustpilot brand name and logo.

What do payday loans California law entail?

In California, a payday lender can offer only one loan to a customer at a time. California has unique laws that are based on the total loan amount: the principal loan borrowed plus the service fee. 

Net Pay Advance’s Director of Legal and Compliance explains, “The loan amount (principal balance plus the service fee) cannot exceed $300 in total”.

Our Director adds, “The lender’s fee may not exceed 15% of the total $300 loan amount. As such, under California law, customers can expect a maximum payday loan offer of $255, with a $45 service fee”.

It is mandatory that a California-licensed lender follows California laws as Net Pay Advance does. As a consumer, you want to be protected, and working with a state-licensed lender ensures that. Payday loans can be used to pay off an emergency expense which is enormously helpful. However, payday loans often get a bad rep when customers take out several loans to pay off other loans, or when repayment rates are able to run rampant. California payday loan laws are made to keep consumers safe by ensuring they’re not being taken advantage of with high fees.  State-licensed lenders are happy to follow these laws, keeping in mind the customer’s best interest.  

We want to be transparent that it is legal for lenders to not be state-licensed. Lenders that are not state-licensed are able to find work around California laws, the very laws that are made to protect consumers.   

Be aware of lenders that are not state-licensed.  

View our California license

Why is a lender offering me more than $300 in California?

Legally, California law mandates that the repayment of a standard payday loan cannot exceed $300, including initial amount borrowed and any service fees. As a California state-licensed lender, we follow this, and other California loan-based laws. Not all lenders are state-licensed. They may go through other means to operate in the state, trying to skirt around the laws.  

More information on California rates and terms

How many payday loans can you have in California?

Legally, California law mandates payday lenders can only offer a borrower one loan at a time. It’s legal for a customer to work with several lenders at once, taking out one loan with each. However, it’s often hard to manage several loans at once and not recommended.

Alternatives to payday loans in California

We get it, your needs may be different than what we can offer under payday loans California law. When this happens, don’t panic. There could be other ways to handle your financial problems. From asking friends and family for help to selling stuff on eBay, there are ways to take care of expenses if getting a loan isn’t possible. 

Explore our list of payday loan alternatives

What are some red flags to watch out for in a payday lender?

Light blue background bears the headline showing this is a list of payday lender red flags preceded by the graphic of a pennant or triangular red flag. Then follows a list of attributes: 1. Too many bad online reviews 2. Offers vague answers or dodges your questions 3. Tries to rush you through the process 4. Makes claims that are too good to be true 5. Does not have state license 6. Sends unsolicited loan documents and offers no kind of fraud support 7. Demands an initial payment to apply for a loan. The Net Pay Advance logo and brand name feature at the bottom.

There are several red flags when it comes to payday lending and lenders.

  1. Too many bad online reviews and an overall low rating is a concern that a lender may not be the best. Online reviews add to the credibility of any business, and we recommend considering them when trying to pick a payday lender.
  2. Ask questions at every step. A genuine lender will be happy to answer your queries and put you at ease. If a lender is being vague or simply dodges or dismisses your concerns, it is a red flag.
  3. A legit lender will walk you through the terms and conditions and make sure you understand what you agree to. Question lenders trying to rush you through the process without pointing out what the fine print says.
  4. Stay leery of lenders that seem too good to be true. For instance, if they claim that their fees are significantly lower than other lenders, it might not be entirely true. Alternatively, if they ask you to lie on your application, that is another thing to be very wary of!
  5. Beware if the lender does not have the state license needed to lend in your state of residence.
  6. It’s a red flag if the company sends you loan documents when you haven’t even applied for a loan. Especially, if they don’t seem to offer any kind of fraud protection when you contact them.
  7. If they ask you to make an initial payment in order to get funds, this is a sign that something is amiss. A fee to borrow funds is fine. A fee to apply or to be paid before you receive your borrowed funds is concerning. After all, you’re likely using a payday loan service to cover an expense because you don’t have the funds necessary.

Listen to your gut and trust your instincts before deciding. Read up on payday loans so that you do not go in without knowledge of how these loans work.

Will taking out a payday loan in California affect my credit?

This depends on the lender you work with and their credit check system. At Net Pay Advance, we do not conduct hard credit checks. We only run soft checks which will not hurt your credit.

What should I do if a lender seems sketchy?

If you do not feel comfortable working with a certain lender, you do not have to choose them. Keep your guard up and do your research before taking out a loan. Remember, you can report illegal activity to the Department of Financial Protection and Innovation.

Payday lenders green flags

These days, we’re not entertaining red flags! From people to payday loans, we’re only going to accept green flags. Make sure a lender has the following green flags before you decide to work with them:

Light blue background bears the heading that this is a list of payday lender green flags. A list of green flag attributes that can show a payday lender is legitimate are provided: 1. Is state licensed 2. Plenty of positive online reviews 3. Is honest about terms and costs 4. Excellent customer service to answer your questions 5. Walks you through the process 6. Does not run hard credit checks 7. Does not make outrageous claims 8. No shady behavior like asking you to falsify information 9. Promotes and advocates for financial education 10. Is a direct lender. A green flag graphic is shown at the top, along with dollar bills. The Net Pay Advance logo and brand name feature at the bottom.

At Net Pay Advance, we’re committed to spreading financial understanding and that’s why we maintain a finance blog on our website. We want our readers to understand concepts like credit, budgeting, money matters, and more. It’s important that our customers have all the information they need to make safe lending choices.

We’re all about safe lending!

At Net Pay Advance, we understand that life isn’t always easy. Sometimes, people need help. We’ve all been there at some point and that’s why we want to offer a reliable way to get funds with our online payday loans. Our team strives to provide top-notch service to our customers, and we take your opinions very seriously. In addition to this, we create and share finance-focused content on our website as well as on our social media. We encourage you to take a deep dive into the world of lending and finance because we promote financial literacy for all. 

If you have any questions or queries, feel free to reach out to us.

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Anna Reeve

As someone that spent a lot of time reading as a kid, I was deeply intrigued by the written word from an early age. My first full-time job post college was writing content for high-end fashion websites. Following my graduation from the MBA program at Pittsburg State University, I found employment in Marketing. For the last couple of years, I have been creating content on several platforms. I am a proud dog-mom to my black labs – Sky & Harry Potter (took fangirling to a whole new level there!), a connoisseur of Indian cuisine, a mediocre artist, and a reality TV addict.

Net Pay Advance is a licensed loan provider, locally owned and operated in Wichita, Kansas. Our No. 1 priority is helping you, the customer, by providing access to the cash you need and helping support financial independence goals with valuable, informational, and entertaining content. Stay up-to-date on our posts by following the Net Pay Advance Facebook, Instagram, and Twitter pages. Our organization is committed to transparency; learn more about our authors and editorial policy. The information provided within this blog is for educational purposes only and should not be construed as financial or legal advice. Please contact us if you have any questions.