Arkansas Payday Loans Online

Payday loans can be a lifeline for individuals needing immediate funds. These short-term, high-interest loans are typically used to cover unexpected costs like car repairs or medical bills, or simply to bridge the gap between paychecks.

However, lending regulations are determined at the state level. This means financial products available in one state may be prohibited in another.

If you live in Arkansas and are considering a payday loan, here is what you need to know.

Are Payday Loans Legal in Arkansas?

No, payday loans are not legal in Arkansas. State law prohibits lenders from charging an annual percentage rate (APR) higher than 17% on consumer loans. Since payday loans typically carry triple-digit interest rates, they cannot legally operate in the state.

Usury Laws in Arkansas

Usury refers to the practice of lending money at unreasonably high interest rates. Arkansas enforces some of the strictest usury laws in the United States and is one of the few states to enshrine specific interest rate limits directly in its constitution.

While the 1874 constitution originally limited rates to 10%, the current laws are based on Amendment 89, adopted in 2010. Under this amendment, the maximum interest rate lenders can charge on consumer loans is strictly capped at 17% per year.

History of Payday Loans in Arkansas

In 1999, the Arkansas Check-Cashers Act allowed check-cashing businesses to charge “reasonable fees” to cover operational costs. Because the law did not classify these fees as interest, companies were able to operate storefronts despite the state’s usury limits.

Under this system, lenders could charge fees up to 10% of a check’s face value, plus a deferred presentment fee. This allowed borrowers to write a check for more than their account balance, which the lender would hold until the borrower’s next payday.

However, the Check-Cashers Act remained in effect only until 2008. In a landmark decision, the Arkansas Supreme Court ruled that the fees constituted interest and that the Act violated the state constitution’s usury provisions. Consequently, the payday loan industry was forced to shut down operations in the state.

Today, there are no legal storefront payday lenders in Arkansas.

Can You Get an Online Payday Loan in Arkansas?

While you may find online lenders based in other states, offering high-interest payday loans to Arkansas residents is illegal. You should only borrow from lenders properly licensed to do business in the state.

Both consumers and the Consumer Financial Protection Bureau (CFPB) have successfully sued lenders attempting to collect on loans that violate Arkansas usury laws. If you believe you have been issued an illegal loan, you can file a complaint with the Arkansas Attorney General’s Consumer Protection Division.

What Are the Alternatives to Payday Loans in Arkansas?

Although payday loans are unavailable, there are other ways to access funds for unexpected expenses.

Get a Personal Loan from a Credit Union or Bank

If you have a decent credit history, consider applying for a personal loan from a local bank or credit union. These loans are legal in Arkansas, carry significantly lower interest rates than payday loans, and offer a clear repayment schedule.

Borrow from Friends or Family

Asking a trusted friend or family member for financial assistance is often the safest option. It allows you to avoid interest charges and set up a flexible repayment plan.

Get a Cash Advance on a Credit Card

Credit card holders may be able to take out a cash advance against their credit limit. While this option often comes with fees and higher interest rates than regular purchases, the costs are generally lower than those of predatory loans.

Use a Pawn Shop

If you own valuable items, you can use them as collateral for a pawn shop loan. These are secured loans where you receive a percentage of the item’s value in cash. If you fail to repay the loan plus interest within the agreed timeframe, the shop keeps your item.

Contact Your Lenders

If you are struggling to pay bills, the Arkansas Attorney General recommends contacting your creditors directly to ask for an extension. Many companies are willing to work with customers facing temporary financial hardship.

Payday Loans Are the Right Choice for Some Consumers, But Not for People in Arkansas

For some, payday loans offer a necessary solution to financial emergencies. However, for residents of the Land of Opportunity, high-interest lending is off the table.

While you cannot legally obtain a payday loan in Arkansas, you are not out of options. By exploring legal alternatives and avoiding unregulated lenders, you can find a financial solution that meets your needs without violating state law.