News About the Ever-Changing Payday Advance Industry
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No — payday lending is effectively illegal in Massachusetts. The Small Loan Act caps interest on small loans at 23% a year plus a maximum $20 administrative fee — far too low for the payday model — and the state does not license payday lenders. A small loan made above the cap, or by an unlicensed lender, is void.
| Status | Prohibited — no licensed payday lending |
|---|---|
| Interest cap | 23% per year on small loans ($6,000 or less) |
| Maximum fee | A $20 administrative fee — no other finance charge allowed |
| Licensing trigger | A license is required once the rate exceeds 12% per year |
| Illegal loans | Void under M.G.L. c. 140 § 110 |
| Enforcement | Division of Banks; Attorney General |
| Law | Massachusetts Small Loan Act (M.G.L. c. 140 §§ 96–114A) |
Payday lending is illegal in Massachusetts and is enforced by the Division of Banks. To report a violation or an illegal lender, use the online complaint form.
Legal alternatives in Massachusetts include a payday-alternative loan from a credit union, an employer paycheck advance, nonprofit credit counseling, or a payment plan with the biller. See our guide to payday loans and alternatives.
A lender can garnish wages in Massachusetts only after it sues and wins a court judgment, and federal law then caps how much can be taken. Massachusetts does not run a statewide payday-loan database, so limits on how many loans you can hold are harder to track from lender to lender. Your rights when you cannot repay are set by a mix of federal and state law — these guides explain how they work:
Disclaimer: general information, not legal or financial advice. Laws change — verify the current rules with the Massachusetts Division of Banks before borrowing. Last reviewed 2026.
Sources
No. The Small Loan Act caps interest at 23% a year plus a $20 fee, which makes payday loans unprofitable, and the state does not license payday lenders.
No. The rate cap applies to online and out-of-state lenders too — a payday loan offered to a Massachusetts resident is unlawful.
23% a year on loans of $6,000 or less, plus a maximum $20 administrative fee and no other finance charge.
The Massachusetts Division of Banks, or the Attorney General's office.
Massachusetts
The Eagle Tribune recently talked to Michael McKeon. The Masschusetts resident knows 25 percent interest each month is high, but when asked why he took out a $500 loan anyway, he just shrugged a little and said, “Desperate times. …”
Massachusetts
Alan L. Feld is the Maurice Poch Research Professor at the Boston University School of Law. Let's just say he isn't a major supporter of military payday loans.
Massachusetts
Most people are familiar with Craig's List. If you need a new couch, peruse the site! Looking for an apartment? Sign on today? Hoping to apply for a faxless payday loan? You've come to the right place!