Payday loans law in Alabama

In Alabama, payday loans are capped at $500 and the maximum term for a payday loan is 31 days. The maximum interest rate that can be charged is 17.5% per month, which equates to an annual percentage rate (APR) of 210%.

Consumer Protections

In order to protect consumers from predatory lending practices, Alabama law requires payday lenders to provide clear and concise information about the loan terms and fees. Borrowers must be informed of the amount of interest and fees that will be charged and must be provided with a written agreement that outlines the loan terms.

In addition, Alabama law requires payday lenders to provide a grace period of at least 10 days after the due date of the loan, during which time the borrower may repay the loan without incurring additional interest or fees. This helps to ensure that borrowers are not trapped in a cycle of debt, as they are given time to pay off the loan without incurring additional costs.


Under Alabama law, payday lenders are prohibited from engaging in certain practices that are deemed to be predatory. This includes:

  • Making false or misleading statements to the borrower
  • Charging interest or fees that exceed the state-mandated limits
  • Threatening to take criminal action against the borrower if they do not repay the loan
  • Requiring the borrower to provide access to their bank account or to post-date a check as collateral for the loan


The Alabama banking department is responsible for enforcing the state's payday loan regulations and laws. If a payday lender is found to be in violation of the law, they may be fined, have their license revoked, or be subject to other penalties.

Consumers who believe that a payday lender has engaged in predatory lending practices can file a complaint with the Alabama banking department. The department will investigate the complaint and, if necessary, take action against the lender.

Alternatives to Payday Loans

If you are in need of short-term financial assistance, there are alternatives to payday loans that you may consider. These include:

  • Borrowing from a friend or family member
  • Applying for a personal loan from a bank or credit union
  • Seeking assistance from a nonprofit organization or government agency


Payday loans in Alabama are regulated by state law, which aims to protect consumers from predatory lending practices. While payday loans can be a useful source of short-term financial assistance, it is important to understand the terms and fees involved and to consider alternative options before taking out a loan. If you have concerns about the practices of a payday lender, you can file a complaint with the Alabama banking department.