Payday Loans are Legal in Iowa

Beware of predatory lending

Payday Lenders in Iowa

In Iowa, payday loans offer immediate financial assistance to those facing unexpected expenses or emergencies.

They are particularly popular among individuals who cannot access traditional loans or credit lines. In Iowa, the average payday loan amount is $323, with an average APR of 273%, according to the Iowa Division of Banking. The high-interest rates and fees associated with payday loans in Iowa can pose significant risks to borrowers who may face credit score damage and the possibility of falling into a cycle of debt with around 50% of borrowers in Iowa taking out six or more payday loans a year.

Lenders who offer payday loans in Iowa must adhere to state regulations and licensing requirements. Some lenders engage in predatory practices, like charging excessive fees or failing to disclose all of the terms of the loan, but reputable lenders prioritize borrower protection and will try to ensure transparency and fairness throughout the process. It is crucial for borrowers to carefully consider the potential risks and consequences before taking out a payday loan in Iowa and to work only with reputable lenders who prioritize their best interests.

Payday Loan Laws

In Iowa, payday loan laws are in place to protect borrowers and ensure fair lending practices. Lenders must provide a detailed contract in both English and Spanish that outlines all terms of the loan, including fees and repayment terms, and it must be in simple and clear language. The contract also needs to include the lender’s contact information and a toll-free number that the borrowers can call if they have any questions or issues. Additionally, borrowers must provide their full contact information to the lender. To prevent excessive borrowing, lenders cannot hold more than two checks from a single borrower at any one time, and cannot hold checks totaling more than $500 in face value from a single borrower. These regulations aim to provide transparency and prevent predatory lending practices.

Iowa has one major code that regulates the payday loan industry:

Loan Terms and Conditions

Maximum loan amount: $500

Maximum Interest Rate: 337%

Minimum loan term: No minimum

Maximum loan term: 31 days

Number of rollovers allowed: No rollovers allowed

Finance Charge: $15 for first $100 borrowed, then $10 per $100 borrowed

Legal action: 10 Years

Certified Payday Lenders in Iowa

Company Name	Company score	License Status
LDF Holdings, LLC	7.9	Valid
SUN LOAN COMPANY INC.	7.2	Valid
CURO Intermediate Holdings	6.5	Valid
CNG Financial Corporation	6.1	Valid
Check Into Cash Inc.	5.8	Valid
Advance America, Cash Advance Centers, Inc.	5.4	Valid

History of Iowa Payday Loans

Iowa has had a relatively lax approach to payday loans for years. In fact, lenders were allowed to charge the maximum fee without any regulation from 1998 until 2004. Because of this, the maximum APR on a 14-day $100 loan increased from 391% in 1998 to a staggering 435% in 2004. In 2012, Iowa was classified as one of 27 “permissive” states that allowed payday lending with minimal regulation. As of 2015, there were 175 payday loan stores in Iowa, according to the State Division of Banking. In 2019, Iowa Senator Joe Bolkcom proposed a limit on payday loan interest rates to be set at 36% APR, but no action has been taken so far.

State Resources

How to file a complaint

The Iowa Division of Banking manages all complaints about payday lenders. They accept complaint forms both online and by mail, but they prefer that borrowers first work through the lender to resolve the issue before filing a complaint, as most issues can be resolved below their level. If those borrowers are not satisfied with the results that come from working with the lender, they should file a complaint.

Iowa Payday Loans Debt Relief

How to Get out of Payday Loan Debt?

If you’re stuck in a cycle of payday loan debt, some steps might help you break free. Start by negotiating a payment plan with your lender to gradually pay off your debt. Some nonprofit organizations offer financial counseling and aid programs. Consider reaching out to credit counseling agencies that can help you create a plan for managing your debt. Additionally, explore options for consolidating your payday loan debt with other debts, which may allow for lower interest rates and simpler repayment terms. To avoid further debt accumulation, it’s essential to act quickly and seek out support as soon as possible.

Support Resources

Types of Quick Loans in Iowa

Title Loans Title loans are short-term, high-interest loans that use the borrower's vehicle as collateral. The loan term is typically 30 days, but can be extended by rolling over the loan with additional fees. Title loans are regulated by the Iowa Division of Banking, which requires lenders to provide clear and conspicuous disclosures about the loan's terms and fees. Borrowers must also receive a written agreement that outlines the loan's terms, the total cost of the loan, and the borrower's rights and responsibilities.

Installment Loans Installment loans offer borrowers access to lump sums of money that must be repaid back in installments over time. In Iowa, installment loans tend to offer longer payment terms and lower interest rates than payday loans, making them a more affordable solution when larger sums of money are needed. They may be secured or unsecured loans, with some lenders offering flexible repayment options such as early repayment without penalty and flexible payment dates or amounts; it's important to review the terms and fees of installment loans carefully to understand what can be repaid on time.

Line of Credit Loans In Iowa, lines of credit are a flexible financing option that allows borrowers to take out funds up to a pre-approved limit. Borrowers can use the funds as needed and only pay interest on the amount they borrow. The repayment terms will usually vary depending on the lender and the borrower's credit history. Lines of credit can be secured or unsecured and are typically offered by banks, credit unions, and online lenders.

Alternatives to Payday Loans in Iowa

Personal Loans

Personal loans are a standard financial product in Iowa that are typically unsecured, meaning that borrowers do not have to put up collateral to obtain the loan. Interest rates and terms can vary depending on the lender and the borrower's credit history. Some lenders may require a minimum credit score or income level to qualify, while others may be more flexible. Borrowers should always shop around and compare rates and terms from different lenders to find the best loan for their needs and financial situation.

Land Loans

Land loans are used to finance the purchase of land for various purposes, including farming, ranching, or building a home. These loans can be secured or unsecured and are offered by banks, credit unions, and private lenders. In Iowa, Land loans typically have higher interest rates than traditional home loans and may require a larger down payment. Borrowers should be prepared to provide detailed information about the land they wish to purchase, including its location, zoning restrictions, and intended use.

Farm Loans

Iowa farmers rely heavily on farm loans to finance their operations. Borrowers can apply for them through banks, the Farm Service Agency, and other state and federal programs. Farm loans are typically secured against the value of the farm itself and usually require collateral such as farm equipment or livestock. The interest rates will vary depending on the type of loan, the borrower's credit history, and the amount of money that is borrowed.

Bad Credit Loans in Iowa

Bad credit loans in Iowa are designed for borrowers with poor credit scores or no credit history. They come with higher interest rates and fees than might be seen with traditional loans, and may potentially require collateral or a co-signer. In Iowa, bad credit loans can be secured or unsecured and are issued by banks, credit unions, and online lenders.

Iowa Small Business Loans

Iowa provides several types of small business loans with different requirements and terms:

SBA loans: Loans that are backed by the U.S. Small Business Administration, which offer lower interest rates and longer repayment terms than conventional loans.
Business lines of credit: A revolving line of credit that gives businesses access to funds they need it. They have flexible repayment terms.
Equipment loans: Loans used to purchase or lease equipment required for running the business, with the equipment itself serving as collateral.
Invoice financing: A type of financing that gives businesses an opportunity to receive cash advances on unpaid invoices. The invoices serve as collateral.
Microloans: Small loans provided by nonprofit organizations or community lenders to help small businesses get started or expand.

VA loans in Iowa

VA loans are available to eligible veterans and active-duty service members who want to purchase or refinance a home. These loans are guaranteed by the VA and offer competitive interest rates and flexible repayment terms. VA loans in Iowa do not require a down payment or private mortgage insurance, making them an attractive option for eligible borrowers. To qualify for a VA loan, borrowers must meet military service requirements and obtain a Certificate of Eligibility from the VA.

Iowa Student Loans

Many options are available to Iowa students to help finance their college education. These options include:

Federal Student Loans: Loans provided by the federal government offering low-interest rates and flexible repayment plans.
Iowa Student Loan: This is a nonprofit organization that offers student loans to Iowa residents attending college in Iowa or out-of-state. They offer fixed and variable interest rates, as well as various repayment options.
Iowa College Student Aid Commission: State-funded program that provides grants and scholarships to Iowa residents attending college in Iowa.
Private Student Loans: Loans from private lenders, they commonly have higher interest rates and may require a co-signer.

Iowa Income Information

According to the 2021 U.S. Census, Iowa had a median household income of $65,429, slightly lower than the national median of $70,717. Iowa’s economy has shown remarkable resilience, with a diverse mix of industries ranging from agriculture to manufacturing contributing to its steady growth. Iowa’s strategic location and well-connected transportation network make it an attractive destination for businesses looking to expand their operations. The poverty percentage in Iowa in 2021 was 11.1%. Median household income and poverty levels vary significantly by county in Iowa, with Dallas County having the highest median income at $88,368 and Appanoose County having the lowest at $39,693.

United States Census Bureau. “Poverty in the United States: 2021.” Accessed on April 21, 2023.
United States Census Bureau. U.S. Census Bureau QuickFacts: Iowa . Accessed on April 21, 2023.

Iowa Payday Lender Complaints

Below are trends associated with the top payday lenders in Iowa, as reported to the Consumer Financial Protection Bureau.

Company Name	Count
LDF Holdings, LLC	8
SUN LOAN COMPANY INC.	3
CURO Intermediate Holdings	2
CNG Financial Corporation	2
Check Into Cash Inc.	1
Advance America, Cash Advance Centers, Inc.	1
Total Complaints	39

Consumer Financial Protection Bureau. Consumer Complaint Database. Accessed on April 21, 2023.

Most Common Issues

Complaint type	Count
Charged unexpected interest or fees	14
Struggling to pay loan	8
Unable to contact lender	6
Problem with payoff process	3
Incorrect information on credit report	2

What are the main reasons residents of Iowa apply for payday cash advance online or offline

Payday loans are typically used for nonnegotiable everyday expenses like your rent, utilities, and groceries. Per data reported by Pewtrust, the percentage of reasons described below

Reason	Share
Regular Expenses (Utilities, car payment)	53%
Unexpected emergency/expense	16%
Rent/Mortgage	10%
Something Special	8%
Other	5%
Did not answer	2%

Payday Lenders by City

Des Moines
Cedar Rapids
Davenport
Sioux City
Iowa City
Waterloo
West Des Moines
Ankeny
Ames
Council Bluffs

Dubuque
Urbandale
Marion
Cedar Falls
Bettendorf
Marshalltown
Mason City
Ottumwa
Fort Dodge
Clinton

Burlington
Muscatine
Waukee
Johnston
Coralville
North Liberty
Altoona
Clive
Newton
Indianola

Frequently Asked Questions

Will applying for a payday loan impact my credit?

Payday loans are typically not reported to the three major credit reporting agencies, and most lenders do not conduct credit checks as part of their application process.

What do I need to apply for a payday loan?

To apply for a payday loan in Iowa, you will typically need to provide your identification, proof of income, bank account information, and contact information.

Can I cancel my payday loan?

In Iowa, borrowers can cancel their payday loan by returning the borrowed amount to the lender by the end of the next business day after receiving the loan, as part of the “right to rescind” provision in Iowa’s payday loan laws.

Can a payday loan lender garnish my wages?

In Iowa, a creditor cannot garnish your wages or bank account without first obtaining a court judgment against you, which requires them to sue you in court. Only after obtaining a court judgment stating that you owe them money can the creditor proceed to garnish your wages or bank account.

Can spouses have separate loans?

Yes, spouses can have separate payday loans in Iowa as long as they individually meet the lender’s eligibility requirements and can provide the necessary documentation and information to apply.

When will I receive my funds if I am approved for a payday loan?

Funds are typically received on the same day or the next business day after loan approval, and can be disbursed through various methods, such as direct deposit or a prepaid debit card.

What happens if I can’t repay my payday loan on time?

You may face additional fees and charges, and the lender may take legal action or send the debt to a collection agency, but it’s important to communicate with the lender and explore all available options.

When could I apply for another payday loan?

In Iowa, you can apply for a new payday loan immediately after you pay the current one off, unless it is the sixth consecutive payday loan, in which case, you must wait 7 days.