Alabama Payday & Small-Dollar Loan Laws
Payday loans legal
Alabama caps payday loans at $500 with a 17.5% finance charge, producing effective APRs near 456% on a two-week loan. Borrowers in the state database cannot have more than $500 in payday loans outstanding at once.
Alabama Lending Overview
Alabama state law permits payday loans with a maximum borrowing limit of $500 per person. To enforce this cap, the state maintains a common database that prevents residents from holding more than $500 in outstanding payday debt at any single time. These loans carry a finance charge of 17.5% of the amount borrowed, with terms ranging from 10 to 31 days. For a standard two-week loan, this fee structure results in an effective APR of approximately 456%.
Borrowers in the state often utilize these short-term options to cover immediate emergency expenses between paychecks. Aside from payday products, residents also access longer-term installment loans and unsecured personal loans through various licensed lenders. These alternatives typically offer different repayment structures and interest rates than the small-dollar, high-interest products regulated under the Deferred Presentment Services Act.
Maximum loan amount
$500
Maximum loan term
10–31 days
Maximum APR / finance charge
~456% APR (17.5% fee)
Rollover / renewal rule
1 rollover allowed
Cooling-off period
1 business day after final rollover
Governing statute
Ala. Code § 5-18A
Who regulates lenders in Alabama
Alabama State Banking Department
File a complaint with the regulator above if a lender violates state law. You can also file with the CFPB.
Alabama loan options
Other state loan laws
Reviewed by Darnell Pierce, MBA. Last reviewed January 2026. This page is informational, not legal advice — verify current rules with the state regulator before borrowing.