Payday Loans in New York and What State Law Allows

Can you legally get a payday loan in New York? No. According to the New York Attorney General, payday lending is banned in the state under its civil and criminal usury laws. The ban covers loans made in person, by phone and online.

The ban works through a rate cap, not a rule that names payday loans. A payday loan is a small, short-term loan repaid from your next paycheck. When its fee is expressed as an annual rate, it lands far above anything New York permits. The New Economy Project puts typical payday rates at 400% or higher.

The Attorney General's page sets two ceilings for personal loans of $25,000 or less. A lender that is not licensed by New York may charge no more than 16% a year. A state-licensed lender may charge up to 25%.

The 25% figure is also the state's criminal usury cap. Pending legislation cites it alongside General Obligations Law §5-501, and the Center for Responsible Lending lists Banking Law Section 735 as part of the same framework. The state Department of Financial Services (DFS) oversees licensed lenders.

Once the product is priced out, the usual payday rules have nothing to govern. New York has no legal payday loan amount, term, rollover limit or repayment plan.

The New Economy Project states that it is illegal for any lender, including an out-of-state or online one, to make a payday loan to a New Yorker. It is also illegal for anyone to collect on one. The group says such loans are void and unenforceable. If you ask your bank or credit union to stop a payday lender's electronic withdrawals, it must do so.

There is one exception. The Attorney General notes that federal preemption keeps the state caps from applying to most out-of-state banks and credit card issuers. Our sources do not treat tribal lenders separately. If any lender quotes you triple-digit rates, you are looking at the product the law bans.

To report a lender, call the Attorney General's Consumer Frauds Bureau at 1-800-771-7755. The New Economy Project's Financial Justice Hotline is 212-925-4929.

In 2025 the Attorney General sued DailyPay and MoneyLion. The suits allege that their paycheck advances are illegal payday loans:

• A typical DailyPay advance is $20 for seven days with a $2.99 fee, an APR above 750%.
• MoneyLion charges $8.99 on a $100 two-week advance, roughly 234%.

Both companies filed motions to dismiss on January 23, 2026. The CRL litigation tracker lists those motions as still being briefed. No ruling appears in our sources.

The STOP Act, S8939, would classify these advances as loans under the 25% cap. As of early 2026 it sat in the Senate Judiciary Committee. Public News Service reported in July 2026 that none of the year's loophole bills had passed. Similar bills in Connecticut would go the other way and exempt these apps from state lending law.

Federal credit unions are capped at 18% APR, as the Rochester Beacon noted on September 23, 2026. That cap is a fraction of what the apps charge. Our sources do not name a New York emergency-loan assistance program. The hotlines above can help if an illegal lender or collector is already involved.

Repeat app advances show up as a pattern of small debits and deposits on the bank statements you hand your lender. One Washington Heights worker in the AG's case took more than 450 advances in under two years. Expect the underwriter to ask about a pattern like that, often in a letter of explanation. Whether the lender counts the advances as a debt payment in your debt-to-income ratio depends on the lender, so ask your loan officer directly.

The cleaner path is to stop using the advances and clear any balance well before your statements are pulled. Then ask your lender what explanation, if any, it will still want.