Payday Loans in Maryland: Laws, Penalties, and Your Options (2026)

Payday loans in Maryland are effectively prohibited: the Consumer Loan Law caps interest on small loans at a level no single-payment, two-week loan can be priced at and still be legal, and the Office of Financial Regulation (OFR) has repeatedly acted against lenders, including online ones, that charge more. This page covers what the law caps, what happens to a loan that breaks it, what a legal small loan costs instead, your rights, and which of the lenders we review serve Maryland. For how Maryland compares with every other state, see payday loan laws by state.

Maryland payday loan rules at a glance

Rule	Maryland
Legal status	Effectively prohibited: the Consumer Loan Law’s rate caps rule out a payday-priced loan (Commercial Law section 12-306)
Covers online and out-of-state lenders	Yes; a license is required regardless of where the lender is based (Commercial Law section 12-302, Financial Institutions section 11-203.1)
Loans that violate the caps or licensing rule	Void and unenforceable; the lender cannot collect principal, interest, or fees (Commercial Law section 12-314)
Rate cap, first $1,000 of a loan of $2,000 or less	2.75% a month, equal to 33% a year (Commercial Law section 12-306(a)(6)(i))
Rate cap, balance above $1,000 (loan of $2,000 or less)	2% a month, equal to 24% a year
Rate cap, loans over $2,000	2% a month, equal to 24% a year, on the entire balance (Commercial Law section 12-306(a)(6)(ii))
Licensing	Required from the Commissioner of Financial Regulation before making any loan to a Maryland resident
Enforcement record	Cease-and-desist orders, civil penalties, and consumer restitution against unlicensed online lenders (OFR enforcement actions)
Regulator	Office of Financial Regulation, Maryland Department of Labor, 410-230-6100 or 1-888-784-0136
Military borrowers	36% federal MAPR cap under the Military Lending Act

What Maryland’s Consumer Loan Law does

Maryland never passed a law authorizing payday loans the way Florida or Ohio did. Instead, the Maryland Consumer Loan Law — Commercial Law Article, Title 12, Subtitle 3, paired with the licensing rules in Financial Institutions Article, Title 11, Subtitle 2 — sets the terms every small loan to a Maryland resident must follow, and the terms rule the payday product out. Financial Institutions section 11-203.1 says a person may not make a loan, or use any advantage the Consumer Loan Law provides, without a license from the Commissioner. Commercial Law section 12-302 restates the licensing requirement for anyone in the business of making these loans. Section 12-306 then caps what a licensed lender can charge: 2.75% a month on the first $1,000 of a loan of $2,000 or less, 2% a month on the rest, and 2% a month on the full balance of anything over $2,000 — 33% and 24% a year. A payday loan’s typical cost, often several hundred percent annualized, is far above either number, so the product cannot be offered lawfully in Maryland at payday-loan prices.

The OFR has applied this to lenders operating entirely over the internet, not just storefronts. In March 2015, the Commissioner of Financial Regulation signed a settlement and consent order with RTMM Consulting, LLC, doing business as PayDayWiz.com, after an investigation found the company had made consumer loans to Maryland residents online between 2009 and 2011 without a license and at interest rates above the section 12-306 caps. The company paid a $4,000 civil penalty, issued $515 in restitution to the two Maryland consumers the OFR identified, agreed to forfeit and never collect on any outstanding balances from Maryland borrowers, and agreed to correct any negative credit reporting tied to those loans. The following month, in April 2015, the Commissioner issued a cease-and-desist order against International Cash Advance, doing business as Magnum Cash Advance and Magnum Funding, after finding that its lending to Maryland consumers was usurious and unlicensed; the order directed the company to immediately stop making further loans to Maryland residents and to stop collecting, directly or through a third-party collector or law firm, on loans it had already made. Both orders rested on the same statutes: the licensing requirement, then in Financial Institutions section 11-204 and now in section 11-203.1, together with Commercial Law section 12-302, and the rate caps in Commercial Law section 12-306. Neither lender was a Maryland storefront; both reached Maryland borrowers only through online loan applications, which is exactly the channel section 12-302 and section 12-314 were written to cover.

If you already have a payday loan in Maryland

Commercial Law section 12-314 makes a loan void when it was made by an unlicensed lender, charges interest above the Consumer Loan Law caps, or violates the federal Military Lending Act. A void loan cannot be collected: the lender has no right to the principal, the interest, the fees, or any other charge, and it cannot transfer the debt to anyone else.

1. Stop and check the license. Call the Office of Financial Regulation at 410-230-6077 and ask whether the lender is licensed to make consumer loans in Maryland.
2. Revoke any debit authorization. Tell the lender in writing, and tell your bank separately, that you are revoking permission to debit your account, and keep copies of both.
3. File a complaint. With the OFR at 410-230-6077 or 410-230-6100, and with the Consumer Financial Protection Bureau.
4. Keep your records. The loan agreement, every payment you made, and every message from the lender or a collector — the RTMM and International Cash Advance orders both relied on records like these to calculate what had to be refunded or written off.

What a legal small loan costs in Maryland

A licensed Maryland lender can still make a small installment loan; it is just bound by the section 12-306 rate caps. On a $1,000 loan repaid in equal monthly installments over a year, at the statutory maximum of 2.75% a month on the declining balance:

	Amount
Borrowed	$1,000
Monthly rate (section 12-306(a)(6)(i))	2.75%
Term	12 months
Total interest, declining balance	About $188
Total to repay	About $1,188
Annualized rate	33%, the statutory maximum

This is our own illustration of the capped rate, not a quote from any lender. A loan between $1,000 and $2,000 blends the two rates: on a $2,000 loan, the first $1,000 of unpaid balance can carry at most 2.75% a month and the second $1,000 at most 2% a month, so the blended annual rate on the loan as a whole sits between 24% and 33% depending on how fast each tranche is paid down. A loan over $2,000 is simpler: 2% a month, or 24% a year, on the entire balance for as long as any of it is outstanding. Either way, the Truth in Lending disclosure a licensed lender must give you states the actual APR, finance charge, amount financed, and total of payments; compare those four numbers against the caps above, and treat any lender quoting a rate above them as one you should not borrow from.

Your rights

1. No unlicensed lending. A person who makes you a loan without a Commissioner’s license, or helps itself to an advantage the Consumer Loan Law provides without one, violates Financial Institutions section 11-203.1 and Commercial Law section 12-302 — whether the lender operates from a Maryland address, another state, or only online.
2. Capped rates. A licensed lender cannot charge more than 2.75% a month on the first $1,000 and 2% a month above that, or 2% a month on a loan over $2,000, under section 12-306. Section 12-314(a) separately bars any person from lending $25,000 or less while directly or indirectly charging interest, fees, or other consideration above what Maryland law authorizes.
3. Void means void. A loan that breaks the rate caps, the licensing rule, or the Military Lending Act is unenforceable under section 12-314; you cannot be required to repay principal, interest, or fees on it, and the lender cannot sell the debt.
4. A license you can check. The OFR maintains a license search for regulated lenders; call 410-230-6077 if you cannot confirm a lender on it.
5. The federal Truth in Lending box. On any loan a licensed Maryland lender does make, the APR, finance charge, amount financed, and total of payments must be disclosed before you sign.

What happens if you cannot repay

If the loan is void under section 12-314, you owe nothing on it; follow the steps above rather than making another payment. If you have a legal installment loan from a licensed lender, call before a payment is late and ask about a revised schedule. Read what happens if you default on a payday loan for how collection generally works, and how to escape the payday loan cycle if repeated borrowing from out-of-state lenders has become the pattern. If the underlying problem is a bill you cannot cover, start with what to do when you can’t make this month’s payment.

Alternatives worth trying first in Maryland

A payday-priced loan is not a legal option in Maryland, so these are the routes that are, roughly cheapest first:

Option	What it costs	The catch
Payment plan on the bill itself	Often nothing	You have to ask before the due date
211 referral to rent, utility, or food help	Nothing	What is funded varies by area
Federal credit union PAL I	Up to 28% APR plus an application fee of up to $20; $200 to $1,000, 1–6 months	One month of membership first; one PAL at a time
Federal credit union PAL II	The same caps; up to $2,000, 1–12 months	Not every federal credit union offers one
Licensed small loan	Up to 2.75% a month on the first $1,000: about $188 on $1,000 over 12 months (above)	Confirm the license with the OFR before you apply

The credit union limits come from federal regulation (12 CFR 701.21(c)(7)): no more than three PALs in six months, and no rollovers. Call 211 to reach the local referral line. Employer pay advances and earned-wage apps cost more than their small fees suggest; payday loan alternatives that actually work has the numbers for each option. If an installment loan is on the table, installment loans vs. payday loans explains how to compare total cost.

If an online lender offers you a loan that looks like a payday loan, check its license with the OFR before you sign anything; if it will not tell you, that is the answer.