Can a lender in Pennsylvania charge triple-digit rates on a personal installment loan? Not legally. A licensed lender can charge up to 24% a year on loans of $25,000 or less, and an unlicensed lender is held to 6%.

An installment loan is a personal loan repaid in fixed monthly payments. It matters here if you are thinking of taking one to cover a gap while a home purchase is pending. State law decides what the loan can cost. Your mortgage underwriter decides what it costs your approval.

Which law sets the limits, and who enforces it

Two laws do the work. The Loan Interest and Protection Law of 1974 is the state's usury law, meaning its general ceiling on interest. It caps interest at 6% a year on loans of $50,000 or less. The Consumer Discount Company Act of 1937 carves out an exception for licensed lenders. Its operating rules sit in 10 Pa. Code Chapter 41.

The regulator is the Pennsylvania Department of Banking and Securities. It calls these lenders "consumer discount companies." Each must be a Pennsylvania corporation and must post a surety bond. The department's licensee page lists 496 of them.

The penalties for breaking the 6% cap are real, according to FindLaw's summary. A borrower does not owe the excess interest and can sue for three times that amount. An intentional violation is a third-degree misdemeanor. As of September 2026, the legislature's record shows no bill in the 2025 to 2026 session has changed either cap.

Rule Pennsylvania figure Source
Licensed lender, loans of $25,000 or less 6% to 24% annual interest DoBS interpretive letter
Unlicensed lender, loans of $50,000 or less 6% a year Loan Interest and Protection Law
Aggregate balance above $25,000 6% simple interest on the excess 10 Pa. Code Ch. 41
Late fee Greater of $20 or 10% of the payment, after 15 days late LendUp rates guide
Payday loans and rollovers Payday lending is illegal LendUp installment guide

What 24% looks like in dollars

Licensed lenders use add-on interest. That means interest is figured once on the original amount and spread across fixed payments. LendUp's rates guide puts the ceiling at $9.50 per $100 per year for terms up to 48 months. For the part of a term beyond 48 months, the ceiling is $6.00. On its example, a $2,000 loan over 12 months costs about $190 in interest, or roughly $182.50 a month. If you pay the loan off early, the lender must refund the unearned interest.

One consumer site lists higher tiers, including 27% on a $500 loan. That conflicts with the department's 24% figure. Our sources do not explain the gap. The terms of your own contract are the numbers that count.

Online lenders, payday loans and the workarounds

Payday loans are illegal in Pennsylvania, which is why short-term cash advances show up here dressed as other products. An online lender making consumer loans above 6% needs the same state license as a storefront. You can check a license on NMLS Consumer Access or by calling 1-800-PA-BANKS (800-722-2657).

Federally chartered banks and credit unions are not bound by the state cap. None of our sources say whether bank-partnership or tribal lenders are reaching Pennsylvania borrowers. Treat any offer above 24% from a lender without a Pennsylvania license as a warning. Active-duty service members and their dependents also get a federal 36% APR cap under the Military Lending Act.

Cheaper places to borrow

Credit union loans in Pennsylvania are capped at 18% a year, according to a Pittsburgh law firm's guide. That is well under the 24% licensed ceiling. Our sources do not cover payday-alternative loans or state assistance programs. Ask your credit union directly what it offers.

How an underwriter reads this loan

If you are buying a home, the loan follows you into underwriting. The monthly payments show up as debits on your bank statements, and the underwriter will ask about them. Expect a request for a letter of explanation, a short signed note saying what the loan is and what it paid for.

The payment also counts in your debt-to-income ratio, the share of your monthly income that goes to debts. A few hundred dollars a month can push a borderline file over the line. If you can pay the loan off before you apply, do it, and keep the payoff confirmation. Taking out a new one after you have applied is a different problem. Tell your loan officer before you sign anything.