Alabama
Alabama Residents Should Maintain Credit, Payday Advance Options
Lowell Barron, D-Fyffe, represents District 8 in the Alabama Senate. He penned the following paraphrased take on payday loans for The Montogomery Advertiser …
Section
Payday Loans in Alabama
Payday Loan Laws in Alabama (2026)
Yes — payday loans are legal in Alabama, capped at $500 with a fee of up to 17.5% ($17.50 per $100) — roughly a 456% APR on a two-week loan. They are regulated by the Alabama State Banking Department under the Deferred Presentment Services Act (Ala. Code § 5-18A).
| Status | Legal — licensed & regulated |
|---|---|
| Maximum loan | $500 (total across all lenders) |
| Maximum fee | 17.5% of the amount advanced ($17.50 per $100) |
| Typical APR | ≈456% on a 14-day loan (≈206% at the 31-day maximum) |
| Loan term | 10–31 days |
| Rollovers | 1 (maximum of two continuous transactions) |
| Cooling-off | Next business day after two continuous transactions are repaid |
| Repayment plan | Yes — four equal monthly installments if you cannot repay |
| Statewide database | Yes — enforces the $500 limit across lenders |
| Statute | Ala. Code § 5-18A (Deferred Presentment Services Act) |
What a payday loan costs in Alabama
At the 17.5% cap, a $300 loan costs a $52.50 fee — you repay $352.50 in two weeks. The APR stays the same at any amount; only the dollars change.
| Amount borrowed | Fee | Total repaid |
|---|---|---|
| $100 | $17.50 | $117.50 |
| $300 | $52.50 | $352.50 |
| $500 | $87.50 | $587.50 |
Your rights as a borrower in Alabama
- You can have at most $500 in payday loans outstanding at one time across all lenders — a statewide database enforces this.
- A loan may be rolled over only once; after that the full balance is due.
- If you cannot repay, the lender must offer a four-installment repayment plan on request before suing to collect.
- A lender cannot require collateral or a co-signer.
- You cannot be criminally prosecuted for a bounced payday-loan check.
- All fees must be disclosed as a finance charge under the federal Truth in Lending Act.
Problem with a lender? File a complaint
Payday lenders in Alabama are regulated by the Alabama State Banking Department, Bureau of Loans. To report a violation or an illegal lender, call (334) 242-3452 or (866) 465-2279 or use the online complaint form.
Alternatives to a payday loan
Before borrowing, weigh lower-cost options — a payday-alternative loan from a credit union, a payment plan with the biller, or nonprofit credit counseling. See our guide to payday loans and alternatives.
Your debt rights in Alabama
A lender can garnish wages in Alabama only after it sues and wins a court judgment, and federal law then caps how much can be taken. Alabama operates a real-time payday-loan database, so state limits on how many loans you can hold at once are enforced across all lenders. Your rights when you cannot repay are set by a mix of federal and state law — these guides explain how they work:
- Can a payday lender sue you?
- Can payday loans garnish your wages?
- Do payday loans affect your credit?
- Payday loan statute of limitations
- How many payday loans can you have?
- How to get out of payday loan debt
Disclaimer: general information, not legal or financial advice. Laws change — verify the current rules with the Alabama State Banking Department, Bureau of Loans before borrowing. Last reviewed 2026.
Sources
Frequently asked
Are payday loans legal in Alabama?
Yes. They are legal and regulated as “deferred presentment” transactions under the Alabama Deferred Presentment Services Act (Ala. Code § 5-18A), administered by the State Banking Department.
How much can you borrow with a payday loan in Alabama?
Up to $500 total across all lenders at any one time. A statewide database is used to enforce this limit.
What is the most a payday lender can charge in Alabama?
A fee of up to 17.5% of the amount advanced ($17.50 per $100). On a typical 14-day loan that is roughly a 456% APR.
What happens if you can't repay a payday loan in Alabama?
The loan can be rolled over once; after that the balance is due and the lender must offer a repayment plan of four equal monthly installments. You cannot be criminally charged for a bounced payday-loan check.
Latest Alabama coverage
Alabama
Alabama Payday Loan Bill Introduced
Sen. Lowell Barron, D-Fyffe, has introduced a bill designed to reform the state’s controversial Alabama payday loans.
Alabama
Alabama Newspaper: Restrict Payday Advance Practices
Regulating Alabama payday loans under the state’s Small Loans Act, as Sen. Bradley Byrne of Montrose wants to do, would be a good step toward protecting low-income citizens from predatory lenders.
Alabama
Legislation Proposed to Cut Rates on Alabama Payday Loans
A state senator says a bill he introduced in the Senate would substantially reduce the interest customers pay when they take out Alabama payday loans.
Alabama
Alabama Small Loan Act Should Cover Payday Advances
Barbara Evans is director of Alabama Watch. She recently wrote in to the Montgomery Adviser …
Alabama
Payday Loan Reform on the Way in Alabama?
State Rep. James E. Buskey thinks it’s time to rethink Alabama’s 3-year-old payday lending law.
Alabama
Alabama Residents Discover Cost of Payday Advances, Cash Loans
According to The Birmingham News, Alabama residents last year paid $225 million in extra fees for small, short-term payday loans, the fifth highest amount in the country, based on a report released Thursday by a consumer advocacy group…
Alabama
Payday Loan Company Donates Money to Schools
PLS Payday Loan Store locations in Alabama, Arizona, California, Illinois, Mississippi, and Wisconsin donated a total of $18,000 to community schools.
Alabama
Retired Army Colonel Slams Candidate, Payday Advance Industry
Try as he might, Senator Lowell Barron cannot shed his image as a one-time payday loan store owner.
Alabama
Cash Loan Store Donates Money to School
Based on the interest rates they charge, most cash advance companies and stores earn a profit. While critics have a problem with this scenario, some of that money is often used for good.