I thought that would be interesting to go through the various 12 States and the one district that either limits payday loan interest or doesn’t allow payday loan lending at all. I’ll be doing one of these articles every week specifically looking into these states.
The maximum interest rate that can be charged in Washington DC is 24%. That is a cap that applies to any kind of personal loan in that district. This rate applies to every Bank and every Credit Union. The max rate would yield a financial result of $16.11 for every $100 borrowed. Unlike many other states that do not cap these loans DC has taken a step to protect the consumer. Other states charge up to 700% annually.
Before 1998 there were no caps on payday lending in Washington DC. In 1998 Washington DC cracked down on high interest predatory lending. That year DC made it illegal for Check cashers to issue post-dated checks. That law put a stop to payday lenders who relied on that particular way of payment. 9 years later in 2007, the district established a 24% interest rate cap, which would be considerably lower than the egregious 700% rates that other states allowed. There is an exception to this and that exception is that tribal lenders in-store fronts and online can still offer ridiculously high rates to DC residents. Unfortunately my guess would be that some residents don’t know about the laws of the district and are fooled by advertisements into borrowing from tribal lenders. A little bit of knowledge is worth a huge interest savings. Tribal lending is the only exception to interest rate laws in DC.
In addition to that, Washington DC makes it mandatory for all payday lenders to have a license. Breaking the law would cause these licenses to be revoked and put these lenders out of business.if you do a search on the internet for payday lending in Washington DC you will find companies that loan money in the district. Be very careful in dealing with them. Make sure by asking and always get everything in writing. The questions are simple. Are you a tribal lender? What is the maximum rate your company charges for a payday loan? If the answers are outrageous you’ve run into a tribal lender, or an online company owned by tribal lenders without an actual business address in Washington DC. Just walk away. There are legitimate payday lenders in our nation’s capital.