California Payday Loan Law, Decoded
Cal. Fin. Code § 23000 et seq. — the Deferred Deposit Transaction Law — is short, strict, and uniform statewide. These rules cover payday loans and cash advances alike — two names for the same deferred deposit product. This page breaks down every rule that matters at the counter.
The rules, line by line
| Rule | What the law says |
|---|---|
| Maximum loan amount | $300 per loan; only one outstanding at a time |
| Maximum fee | 15% of the face value (≈ $17.65 per $100 advanced) |
| Maximum term | 31 days |
| Rollovers | Forbidden — no new fee to extend, no back-to-back loans from the same lender |
| Cooling-off / rescission | Cancel free by end of the next business day |
| Collection | Civil only; criminal prosecution or threats over a returned check are barred |
| Licensing | Lender must hold a California Financing Law license from the DFPI |
| Repayment plan | No fee-free statutory repayment plan required, but lenders may offer one — ask before defaulting |
What's outright prohibited
- Rollovers. Paying a fee to extend the due date is illegal, full stop.
- Loans over $300 structured as deferred deposit transactions.
- Criminal threats. Threatening prosecution over a returned check violates the statute itself.
- Splitting loans. A lender cannot divide one loan into two to dodge the $300 cap.
- Unlicensed lending. No DFPI license, no enforceable contract.
Checking a license before you sign
- Ask the storefront or website for its California Financing Law license number.
- Verify it in the DFPI database at dfpi.ca.gov.
- Compare the written fee to the 15% ceiling — anything higher is illegal.
- Keep the contract copy; it must show fee and APR before you sign.
Rescinding a loan
Changed your mind overnight? California gives you until the end of next business day to return the cash and owe nothing. This right is the cheapest insurance in the deal — use it if the numbers don't add up.
Regulator & complaint
The California Department of Financial Protection and Innovation enforces this law. If a lender rolls you over, overcharges, or threatens criminal action, complain at dfpi.ca.gov/file-a-complaint.
Law FAQ
What statute governs payday loans in California?
The California Deferred Deposit Transaction Law, California Financial Code § 23000 et seq., enforced by the Department of Financial Protection and Innovation (DFPI).
How do I verify a lender is licensed?
Search the lender by name in the DFPI licensee database at dfpi.ca.gov. Unlicensed lending is illegal in California, and contracts from unlicensed lenders are unenforceable.
Why do lenders give me $255 when I ask for $300?
The $300 limit applies to the check you write, not the cash you receive. With the maximum 15% fee ($45), a $300 check means $255 in hand.
Does California cap the APR on payday loans?
No single APR cap — the law caps the fee at 15% of face value instead. On a typical 14-day term that equates to roughly 391% APR; on 31 days, about 177%.
Ready to compare offers?
See what lenders in our network can offer you — checking rates won't affect your credit score. California rules apply statewide: $300 max, 15% fee, no rollovers.
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