Payday loans in Massachusetts: the rules and your way out

Massachusetts's rules, line by line

Fee or rate cap

For loans not over $6,000: 23% per year on the unpaid balance of the amount financed (actuarial method), plus a $20 administrative fee when the loan is granted, charged no more than once in any 12-month period (209 CMR 26.01(1)(a)). After one year past maturity, no more than 6% per year (26.01(2)). Anyone making loans of $6,000 or less at more than 12% a year in interest and expenses needs a license (M.G.L. c. 140, s. 96).

Loans at once

A licensee may not willfully let a borrower be obligated under more than one loan contract at the same time to obtain a higher charge than allowed on a single loan (M.G.L. c. 140, s. 100).

Limits on collection

Any loan made by an unlicensed person in violation of c. 140, ss. 96-111 is void (M.G.L. c. 140, s. 110). The Division of Banks has told debt collectors that small loans by unlicensed lenders, or with rates and fees above the legal limits, are void under s. 110 and that trying to collect such debt is illegal (Industry Letter, Apr. 8, 2013). Unlicensed lending is punishable by up to 10 years in state prison and/or a $10,000 fine (s. 110).

Other rights

Loans arranged from inside Massachusetts but funded from outside the state are treated as made in Massachusetts (c. 140, s. 96).

If you are behind on a payday loan in Massachusetts

1. Check whether the loan was legal to make. Massachusetts does not allow payday loans at typical payday prices. If a lender charged more than the state's limit, report it to the Massachusetts Division of Banks (DOB) through its complaint page.
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

• Check whether a lender is licensed in Massachusetts
• File a complaint with the Massachusetts Division of Banks (DOB)
• File a complaint with the Consumer Financial Protection Bureau

Sources

• M.G.L. c. 140, s. 96, Small loan business, read 2026-10-24
• M.G.L. c. 140, s. 100, Licensee charges, read 2026-10-24
• M.G.L. c. 140, s. 110, Business without license; validity of transactions, read 2026-10-24
• 209 CMR 26.00, Small Loans Regulatory Board (Division of Banks), read 2026-10-24
• Division of Banks Industry Letter, Collection of illegal loans in Massachusetts (Apr. 8, 2013), read 2026-10-24
• Division of Banks Licenses (all licensing through NMLS), read 2026-10-24

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.