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Which states cap interest on small loans? A plain-English guide

45 states and DC cap the rate on a $500 loan, but the limits vary and a few states have none. What the caps are, why 36% matters and how to check your state.

Bison Cash USA editorial teamUpdated October 17, 2026Fact-checked against 4 primary sources

The short version

At a glance

Key takeaways

  • 45 states and DC cap the APR on a $500, six-month installment loan. 43 states and DC cap a $2,000, two-year loan, and 42 states and DC cap a $10,000, five-year loan.1
  • A 36% APR cap is a widely accepted maximum for small loans, and most states cap rates at or near that level for a $500 loan.1
  • Delaware and Missouri have no rate limit at all, according to the National Consumer Law Center.1
  • Active-duty service members are protected by a 36% federal cap under the Military Lending Act.2

The count

How many states cap small-loan rates

States (plus DC) with an APR cap, by loan size. The caps include fees and apply to closed-end, unsecured loans from licensed non-bank lenders.

States with an APR cap, by loan size

Number of states, plus DC in each case

$500 loan, six months45 + DC
$2,000 loan, two years43 + DC
$10,000 loan, five years42 + DC
$500 and $2,000 data as of September 2025; $10,000 data as of August 2023. Source: National Consumer Law Center.1

The benchmark

Why 36% matters

The National Consumer Law Center calls a 36% APR cap a widely accepted maximum for small loans. Most states cap a $500 loan at or near that level, and most set lower caps for larger loans.1

The difference adds up. On a $10,000 loan repaid over five years, a 36% rate instead of 25% adds more than $4,000 in cost.1 By our math, that is $11,680 in interest at 36% versus $7,611 at 25%, a difference of about $4,069.

$10,000 · 5 years at 25% → $293.51/mo · $7,611 interest
$10,000 · 5 years at 36% → $361.33/mo · $11,680 interest

The gaps

States with weak or no caps

Some states have no rate cap at all. Depending on loan size, three to six states only prohibit “unconscionable” rates, meaning rates so high they shock the conscience. Delaware and Missouri have no limit whatsoever.1

Voters have pushed back. Overwhelming bipartisan majorities supported caps of 36% or less in Arizona, Colorado, Montana, Ohio and South Dakota.1

Federal limits

Federal caps that apply everywhere

Military Lending Act: 36%

Most consumer credit for active-duty service members and their dependents is capped at a 36% military APR, which includes most fees.2

Credit union PALs: 28%

Federal credit union payday alternative loans are capped at 28% APR in every state.3

State registration

Lenders must register in the states where they do business. You can check with your state attorney general or banking regulator.4

What it means for you

How to use your state’s rules

  1. 1

    Look up your state regulator

    Your state banking or financial services regulator lists licensed lenders. A lender that is not registered is a red flag.4

  2. 2

    Check the APR on every offer

    State caps include fees, so the APR in your loan disclosure is the number to compare with your state’s limit.

  3. 3

    Be careful with online lenders

    Online lenders generally must be licensed in the states where they lend. Ask which state license covers your loan, and confirm it with your regulator.

  4. 4

    Consider a capped option first

    A federal credit union PAL at no more than 28% APR is available in every state.3 See how PALs work.

FAQ

Common questions

Which states have no interest rate cap on small loans?

According to the National Consumer Law Center, Delaware and Missouri have no rate limit at all. Depending on loan size, three to six states only prohibit unconscionable rates.

What is a good APR cap for small loans?

The National Consumer Law Center calls 36% a widely accepted maximum for small loans, and most states cap a $500 loan at or near that level.

Do state rate caps include fees?

In the NCLC analysis, yes. The caps it compares include fees and apply to closed-end, unsecured loans from licensed non-bank lenders.

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Sources

Sources for this page

Official and primary sources only. Last reviewed October 17, 2026.

  1. 1
    National Consumer Law CenterState law research
    State APR Caps for $500, $2,000 and $10,000 Installment Loans
    nclc.orgDecember 18, 2025
  2. 2
    Consumer Financial Protection BureauFederal law
    What is covered under the Military Lending Act?
    consumerfinance.gov36% MAPR cap
  3. 3
    America's Credit UnionsNCUA rules
    Comparing PALs I and PALs II Loans
    americascreditunions.orgLoan limits, terms and 28% cap
  4. 4
    Federal Trade CommissionRegulator guidance
    What To Know About Advance-Fee Loans
    consumer.ftc.govScam warning signs