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Alabama · checked October 24, 2026

Payday loans in Alabama: the rules and your way out

Payday loans allowed, with limits

Alabama's Deferred Presentment Services Act lets licensed lenders make single-payment payday loans of up to $500 for 10 to 31 days at a fee of up to 17.5% of the amount advanced.

Law: Ala. Code §§ 5-18A-1 to 5-18A-22 (Deferred Presentment Services Act); Ala. Admin. Code ch. 155-2-4. Code of Alabama as served by the Legislature's ALISON code site (section histories show Act 2003-359 with no later amendment), read 2026-10-24; regulations ch. 155-2-4 (2013, amended 2020)

Alabama's rules, line by line

Largest loan
$500 per transaction; a lender may not knowingly lend if the customer's outstanding deferred presentment transactions from all lenders would exceed $500 (Ala. Code § 5-18A-12(a), § 5-18A-13(a)).
Shortest term
10 days
Longest term
31 calendar days
Fee or rate cap
Maximum fee not to exceed 17.5 percent of the amount advanced (Ala. Code § 5-18A-12(a)); no other fees except one NSF fee.
Renewals and rollovers
One renewal/extension at the same fee, for a maximum of two continuous transactions (§ 5-18A-12(b)). After the initial loan and one rollover the full balance becomes due (§ 5-18A-12(c)).
Waiting period between loans
After two continuous transactions, the lender may not make a new deferred presentment transaction to the same customer until the next business day after the amount is repaid in full (§ 5-18A-12(b)).
Loans at once
No numeric count limit; total outstanding deferred presentment transactions from all lenders may not exceed $500 (§ 5-18A-13(a)).
Payment plan if you cannot pay
After the initial loan and one rollover, if the customer cannot repay in full, the statute says the lender 'may offer' an extended repayment option of four equal monthly installments (§ 5-18A-12(c)); the Banking Department's posted-notice language says the four-installment option is at no additional cost. The lender may not sue on a defaulted loan until it sends written notice of the customer's rights and the customer fails to exercise them within 15 days (§ 5-18A-12(c)), and by regulation may not file legal claims without first offering in writing an extended repayment plan of four equal monthly payments at no additional cost (Ala. Admin. Code r. 155-2-4-.12(2)). Ask the lender in writing for the four-payment extended repayment plan, especially after receiving a default notice.
State loan database
Yes: statewide real-time deferred presentment database run by Veritec (www.aldpp.com) under Ala. Code § 5-18A-13(o) and Ala. Admin. Code r. 155-2-4-.09.
Limits on collection
Only one NSF fee per transaction (§ 5-18A-12(d)), capped by Ala. Code § 8-8-15 at the greater of $25 or the bank's actual return charge, up to $30. If the lender sues it may recover court costs and attorney's fees of no more than 15% of the face amount of the check (§ 5-18A-13(h)). A borrower may not be convicted under the bad-check law (§ 13A-9-13.1) for a check returned for insufficient funds; only checks returned for an account closed may be pursued that way (§ 5-18A-13(h)); by regulation lenders may not threaten criminal prosecution unless the account was closed before the day of the transaction (r. 155-2-4-.12(1)). No security or guaranty may be required (§ 5-18A-13(k)).
Other rights
Right to redeem the check early by paying the contract amount before the agreed deposit date (§ 5-18A-13(c)); written agreement and itemized TILA fee disclosure before signing (§ 5-18A-13(f)-(g)); lender may not use proceeds of another payday loan to pay off, extend or consolidate a loan except as § 5-18A-12 allows (§ 5-18A-13(n)). No statutory rescission right found.

If you are behind on a payday loan in Alabama

  1. Ask for the payment plan before the due date. Alabama law gives borrowers a way to repay in installments. The details are in the table above. Ask in writing and keep a copy.
  2. Stop the automatic withdrawals if they are emptying your account. You can revoke the lender's permission to debit your account and tell your bank. How to do it.
  3. Look at a credit union payday alternative loan. Federal credit unions can lend $200 to $2,000 at much lower cost. How they work.
  4. Talk to a nonprofit credit counselor. A counselor can look at all your bills, not just this one. How to find a real one.

Check a lender, or report one

Sources

This page summarizes the law; it is not legal advice. Laws change, and the statute and regulator control. If something here is out of date, write to hello@paydayloan.help.

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