Payday loans in Washington State can be appealing, but it’s important to understand how they work before considering. Learn more with WECU so you can make informed financial decisions!
What is a Payday loan?
A payday loan, sometimes called a payday advance, is a smaller loan that is unsecured (there’s no collateral) that typically has high interest rates and is paid back in a shorter term and in one single payment.
The borrower writes a post-dated, personal check for the amount borrowed plus the fee for borrowing the money. The lender holds onto the check and deposits it when the customer returns. Or the lender gets authorization to electronically debit your account.
Payday loans are often used in emergencies and when the borrower does not have good enough credit to receive a lower cost loan. Payday lenders do not typically verify your ability to repay the loan.
When it comes to payday loans, Washington residents have specific rules to follow. In Washington State, you can borrow $700 or 30% of your gross monthly income, whichever is less. You can take 8 payday loans per 12-month period. While payday loans are typically a lump sum (one single payment) payback, in Washington State you can request an installment plan where you make multiple payments. Be aware, if you already have an installment plan you cannot get another loan.1
If you’re considering a payday advance in Washington, it’s important to fully understand the repayment terms and limits before borrowing.
How much does a payday loan cost in Washington State?
Lenders may charge a maximum of 15% of the loan amount.2 As an example, a $500 loan will have a $75 fee.
Fees are capped but the APR can still be very high, exceeding 390%. To give a comparison, 20.13% is the average credit card rate.3
Who can make a payday loan? Make sure the lender is legitimate
In Washington state you can verify the license of a payday lender by calling 1-877-RING-DFI.4
Checklist Before Taking out a Payday Loan in Washington State
- Verify the License of the Payday Lender
- Consider alternatives. If you owe money to your landlord, consider asking for some more time. If it’s for groceries, consider the food bank.
- Look at other loans, like personal loans or a credit card.
- Borrow only what you need and what you can afford. If the bill is for $150, don’t take out $700 because it would be nice to have extra cash. Remember, you will have to pay it back plus the fee.
- Make sure you pay attention to terms, limits and due dates.
- Consider reaching out to nonprofits for support if possible.
Know Your Rights as a Resident in Washington State
- Installment Plans: If you are unable to repay a payday loan, you can request an installment repayment plan without any additional fees.1 Keep in mind, you cannot take out another payday loan while you are on an installment plan.
- For loans of $400 or less, the installment plan must last at least 90 days.5
- For loans over $400, the installment plan must be at least 180 days.5
- Within one business day of taking out the loan you have the right to change your mind.1
How can WECU Help You
WECU may have solutions that are helpful. Check out WECU’s personal loans that you can see if you prequalify for today. Additionally, if you are a member you have access to high quality financial counseling from Money Management International, they can help you manage debt, review your credit report and much more. Contact WECU for help.
References
- Washington State Department of Financial Institutions. “Consumers Guide to Payday Loans In Washington State.” Accessed August 6, 2025.
- “RCW 31.45.073: Making small loans—Endorsement required—Due date—Termination date—Maximum amount—Installment plans—Interest—Fees—Postdated check or draft as security.” Accessed August 29, 2025.
- Bankrate. “Current Credit Card Interest Rates | Bankrate” Accessed August 6, 2025.
- “Washington State Department of Financial Institutions.” Accessed August 29, 2025
- “Payday Lending – Borrower Rights And Responsibilities.” Accessed August 29, 2025.
