Payday Loans in New York: Laws, Usury Limits, and Your Options (2026)

Payday loans in New York are not legal. New York caps interest at 16% a year under its civil usury law, makes charging more than 25% a year a felony, and treats a usurious loan as void. Personal loans of $25,000 or less at higher rates require a license from the Department of Financial Services, and loans from out-of-state and online lenders above New York’s limits cannot be enforced in the state. This page covers what the law says, what to do about a payday loan you already have, your rights, and your options. For how New York compares with every other state, see payday loan laws by state.

New York payday loan rules at a glance

Rule	New York
Legal status	Not permitted: payday fees exceed both the civil and criminal usury limits
Civil usury limit	16% a year (Banking Law 14-a, General Obligations Law 5-501)
Criminal usury	Knowingly charging more than 25% a year is a class E felony (Penal Law 190.40)
Usurious loan	Void; a court must cancel it and stop enforcement (General Obligations Law 5-511)
License required	For personal loans of $25,000 or less, business loans of $50,000 or less (Banking Law 340)
Out-of-state loans	Unenforceable in New York above the rates New York permits (Banking Law 356)
Evasion	Barred “by any device, subterfuge, or pretense whatsoever” (Banking Law 356)
Regulator	Department of Financial Services, 800-342-3736
Military borrowers	36% federal MAPR cap under the Military Lending Act

Why payday loans cannot operate in New York

A payday loan charges a flat fee for a loan due on your next payday. At $15 per $100 for 14 days, the fee works out to about 391% APR (our own arithmetic). New York law leaves no room for that price.

• The civil usury limit. The maximum rate under General Obligations Law 5-501 is 16% a year (Banking Law 14-a).
• The criminal usury limit. Penal Law 190.40 makes it criminal usury in the second degree, a class E felony, to knowingly charge interest above 25% a year when the lender is not authorized by law to charge more.
• The license requirement. Banking Law 340 requires a DFS license to be in the business of making personal loans of $25,000 or less at rates above the usury limit. An unlicensed lender cannot charge more than the law allows anyone else.
• Void contracts. A usurious loan contract “shall be void” (General Obligations Law 5-511).

Online and out-of-state lenders

Banking Law 356 says a loan made at rates above what New York permits cannot be enforced in New York, wherever the lender made it, and it bars attempts to evade the licensing law by any device, subterfuge, or pretense. An online lender located in another state, or offshore, gets no exemption by lending over the internet to a New York borrower. For lenders that cite tribal affiliation, see tribal loans and sovereign immunity.

If you already have a payday loan in New York

1. Check the license. Ask DFS at 800-342-3736 whether the lender is licensed in New York.
2. Know what the law says. A usurious loan is void, and a court must declare it void, stop any action to enforce it, and order it canceled (General Obligations Law 5-511).
3. Revoke the debit authorization. Tell the lender in writing, and tell your bank, that you revoke permission to debit your account. Keep copies.
4. File a complaint. With DFS at dfs.ny.gov/complaint, and with the Consumer Financial Protection Bureau.
5. Get advice. A legal aid office or a consumer attorney can tell you what to do about payments you already made.

What the usury limits mean in dollars

The table compares one $500 loan held for 14 days under a typical payday fee and under New York’s two limits:

Charge on $500 for 14 days	Dollar cost
$15 per $100 payday fee	$75.00
25% a year (criminal limit)	About $4.79
16% a year (civil usury limit)	About $3.07

These are our own figures, not a quote. A payday fee is roughly 16 times the most New York lets an unlicensed lender charge before the charge becomes a crime.

Your rights

1. No payday loans. A lender charging payday rates to a New York borrower without authority to do so is breaking the law, and its loan is void.
2. Protection from out-of-state lenders. A loan above New York’s permitted rates cannot be enforced in the state, wherever it was made.
3. A regulator to call. DFS takes complaints about unlicensed and online lenders.
4. The federal Truth in Lending box. On any lawful loan, 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 from a lawful lender, call before the payment is late and ask about a revised schedule. If it is a payday loan from an unlicensed or out-of-state lender, follow the steps above before paying anything more. Read what happens if you default on a payday loan for how collection works, and how to escape the payday loan cycle if you are caught in repeated borrowing. If the real 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 New York

A payday loan is not a legal option in New York, 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 county
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

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 you do borrow, borrow from a New York-licensed lender, bank, or credit union, and check the APR in the Truth in Lending box before you sign.