Can you still get a payday loan in South Dakota? Not in the form most people picture. Since November 2016, state law has capped the total cost of these loans at 36% APR. At that rate, the business stopped paying for most of the lenders who offered them.

A payday loan is a small loan you repay from your next paycheck. It is sometimes called a deferred deposit or a cash advance. Making one is still legal in South Dakota. What the law took away is the fee structure that made these loans profitable.

What South Dakota law allows

The rules come from SDCL Chapter 54-4 and Initiated Measure 21. Voters approved the measure on November 8, 2016, with about 76% of the vote. The South Dakota Division of Banking licenses these lenders and requires a separate license for every location.

As of September 2026, the Division's guidance says the 36% cap counts the total cost of credit. That includes interest, fees and any add-on product sold with the loan. SDCL 54-4-44.1 bars any "device, subterfuge, or pretense" used to get around it.

Rule South Dakota Source
Maximum loan $500, as a single loan or as the total owed to one lender Division of Banking
Maximum cost 36% APR, all fees and add-ons included IM 21, Division of Banking
Rollovers and renewals Limited by SDCL 54-4-65. Any rollover after November 15, 2016 is also held to the 36% cap Statute, Division of Banking
Penalty for charging more Class 1 misdemeanor. The loan is void and nothing on it can be collected Division of Banking
Minimum or maximum term, cooling-off period, loan database, payment plan Not stated in the sources we reviewed. Check the statute or call the Division None

Why the storefronts disappeared

Before the cap, a typical South Dakota payday loan was about $350 for two weeks, at rates up to 574% APR, according to Brookings. Rollovers produced about 75% of lender revenue.

The cap changed that math. South Dakota News Watch reported that a $100 one-week loan once earned a lender about $10. Under the cap, it earned about 75 cents. The state had 441 licensed short-term lenders before the cap. Of those, 111 shut down within six weeks, and about 52 more had let their licenses lapse by early 2018.

Online and tribal lenders are the gray zone

Credit counselors told News Watch that borrowers were turning to unregulated online lenders operating across state lines and on tribal land. Under SDCL 54-4-76, a loan from an unlicensed lender cannot be collected beyond the principal. Our sources do not settle how the cap applies to tribal lenders.

Banks and federally insured institutions are exempt from the Division's license. Before you borrow, you can ask the Division whether it oversees a lender at 605-773-3421. You can also file a written complaint through its complaint process.

Pawn loans are not the same thing

Pawn shops fall outside this cap. News Watch reported a 20% to 30% rise in pawn transactions after 2016, at effective rates of 240% to 300% APR.

The cheaper options Brookings cites are credit union loans, capped near 18%, and federal credit union Payday Alternative Loans, capped near 28%. News Watch also described a state-backed emergency fund lending up to $1,000. That fund drew little interest, and our sources do not name it or confirm it still operates.

If you are closing on a house soon

A short-term loan shows up in the bank statements your lender reviews. The deposit arrives, and the repayment comes out of your account soon after. An underwriter may ask you for a letter of explanation. Any payment still owed can also count in your debt-to-income ratio, the share of your monthly income that goes to debt.

Our sources do not give the agency rules on this, and handling differs by lender. The safer move is to pay the loan off before you apply and to tell your loan officer about it up front, before the statements raise the question for you.