Compare legal limits, fees and the true cost of small loans in your state before you talk to any lender. Compare legal limits, fees and the true cost of small loans in your state.
Massachusetts Loan Rules
High-cost payday lending is prohibited in Massachusetts under the Massachusetts Small Loan Act, which is enforced by MA Div. of Banks to protect residents from triple-digit interest charges. State law establishes a strict rate cap of 23% APR. Because a typical payday loan nationally charges about $15 per $100 for two weeks—or roughly 391% APR—short-term deferred presentment lenders cannot legally charge payday rates in Massachusetts. Any online payday loan offer advertising triple-digit rates exceeds Massachusetts legal limits, and a borrower must be at least 18 years old to sign a loan contract, as shown in the payday table below.
Borrowers in Massachusetts who need a small loan still have regulated, legal options that comply with state law. Licensed lenders can offer fixed-payment installment loans under the Massachusetts Small Loan Rate Order / Small Loans Law, where the maximum all-in APR is 37% for a $500 six-month loan, 25% for a $2,000 two-year loan, and 36% for a $10,000 five-year loan, as detailed in the installment table below. Federal credit unions also offer Payday Alternative Loans (PALs) ranging from $200 to $2,000 for 1 to 12 months, with a maximum 28% APR and an application fee up to $20 for members. Use the tables and links below to review every rule enforced by MA Div. of Banks and compare licensed lenders and credit unions in Massachusetts.
Payday loan rules in Massachusetts
| Legal status | Prohibited — rate cap 23% APR |
|---|---|
| Governing law | Massachusetts Small Loan Act |
| Fee or rate cap | Capped at 23% APR |
| State regulator | MA Div. of Banks |
| Minimum borrowing age | 18 |
Installment loan rules and APR caps in Massachusetts
| Governing law | Massachusetts Small Loan Rate Order / Small Loans Law (Mass. Gen. Laws ch. 140, § 96 et seq.; 209 Mass. Code Regs. 26.01) |
|---|---|
| Required license | Small Loan Agency License |
| Max all-in APR ($500 / 6 months) | 37% |
| Max all-in APR ($2,000 / 24 months) | 25% |
| Max all-in APR ($10,000 / 60 months) | 36% |
| Origination fee limit | Up to $20 administrative fee on loans of $6,000 or less (209 Mass. Code Regs. 26.01) |
| Credit insurance rules | Allowed |
| State regulator | Massachusetts Division of Banks |
Before you borrow in Massachusetts
- Verify the lender's license in Massachusetts. Confirm that the lender holds an active state license with MA Div. of Banks before sharing your bank account details or signing an agreement. You can also look up the company on NMLS Consumer Access (nmlsconsumeraccess.org), though not every state uses NMLS for every license type.
- Check the Truth in Lending disclosure box. Under the federal Truth in Lending Act and Regulation Z, every lender must give you a written disclosure showing the APR, finance charge, amount financed, and total of payments before you sign the contract.
- Compare the all-in APR and origination fee to state caps. Make sure the contract's all-in APR and any origination fee stay within the Massachusetts limits shown in the tables above, such as 37% on a $500 six-month installment loan under the Massachusetts Small Loan Rate Order / Small Loans Law. Covered active-duty servicemembers and their dependents are protected by the federal Military Lending Act, which caps covered credit at 36% Military APR.
- Review your right to cancel and payment stop protections. Check the payday table above to see how rescission (your right to cancel a loan shortly after signing) works in Massachusetts. If you set up recurring electronic bank debits, federal Regulation E lets you stop preauthorized withdrawals by notifying your bank at least 3 business days before the scheduled debit, though this does not cancel the debt.
- Check credit union Payday Alternative Loans (PALs). Before taking a higher-cost non-bank loan, see if you qualify for membership at a credit union in Massachusetts. Under NCUA rules, federal credit union PALs offer $200 to $2,000 for 1 to 12 months with a maximum 28% APR and an application fee of up to $20.
How online and tribal lenders fit Massachusetts law
Online lenders making consumer loans to residents of Massachusetts generally must be licensed by MA Div. of Banks and obey the rate caps set by the Massachusetts Small Loan Act and the Massachusetts Small Loan Rate Order / Small Loans Law, regardless of where the lender is located. You can check whether a website is operated by a licensed lender by contacting MA Div. of Banks in Massachusetts or searching NMLS Consumer Access (nmlsconsumeraccess.org), though not every state uses NMLS for every license type. Some online lenders claim tribal sovereign immunity and argue that Massachusetts usury caps and licensing laws do not apply to their loans. Federal appeals courts have reached different results on tribal immunity in online lending: several decisions (2nd Circuit in 2014 and 2019, 4th Circuit in 2021, and 7th Circuit in 2021) supported states and the CFPB, while one decision (4th Circuit in 2019) found a lender protected by immunity.
Small-dollar lending in Massachusetts by the numbers
- Residents
- 6,992,213
- Median household income
- $109,539
- Loan company offices
- 4
- Loan companies
- 1
- Bank branches
- 1,882
- Banks
- 118
- Credit unions
- 122
- Pawn shops
- 53
Sources for Massachusetts counts: Financial provider totals come from our state directories, compiled using FDIC data for banks and bank branches, NCUA data for credit unions, company websites and public map listings for loan companies and offices, and Overture Maps data for pawn shops. Resident population and median household income figures come from the U.S. Census Bureau.
Detailed Massachusetts loan guides and local directories
Where to file a lending complaint in Massachusetts
If a lender operating in Massachusetts charges more than the statutory cap, lends without a required state license, ignores your right to cancel, or uses unlawful collection tactics, save copies of your loan contract, Truth in Lending disclosures, and payment records. You can submit a formal complaint to MA Div. of Banks in Massachusetts and to the federal Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov. Be aware that no lender or debt collector can have you arrested or jailed for an unpaid consumer debt.
Loan rules FAQ: Massachusetts
Are payday loans legal in Massachusetts?
No, high-cost payday loans are prohibited in Massachusetts under the Massachusetts Small Loan Act, which is enforced by MA Div. of Banks across the state. State law sets a rate cap of 23% APR, making triple-digit deferred presentment loans unlawful to offer to Massachusetts residents.
What is the maximum APR on an installment loan in Massachusetts?
Under the Massachusetts Small Loan Rate Order / Small Loans Law, the maximum all-in APR on an installment loan in Massachusetts depends on the loan amount and repayment period. State rules set the limit at 37% for a $500 six-month loan, 25% for a $2,000 two-year loan, and 36% for a $10,000 five-year loan. Check the installment table above for specific rules on origination fees and credit insurance enforced by MA Div. of Banks in Massachusetts.
What is the minimum age to take out a small loan in Massachusetts?
You must be at least 18 years old to enter into a valid small-dollar loan contract in Massachusetts. This minimum borrowing age applies to both storefront locations and online lenders serving Massachusetts residents. Lenders will ask for government-issued identification to verify your age before issuing Truth in Lending disclosures.
Who regulates small-dollar lenders in Massachusetts?
Non-bank payday and installment lenders in Massachusetts are licensed and supervised by MA Div. of Banks under state law. Borrowers can verify a lender's license status by contacting MA Div. of Banks directly or by searching NMLS Consumer Access at nmlsconsumeraccess.org, though not every state uses NMLS for every license type. At the federal level, the Consumer Financial Protection Bureau (CFPB) also oversees federal lending disclosures and collection practices.
What should I do if a lender in Massachusetts charges more than the law allows?
If a lender charges fees or an APR above the legal limits in the Massachusetts Small Loan Act or the Massachusetts Small Loan Rate Order / Small Loans Law, gather your loan agreement, Truth in Lending disclosure box, and bank statements. Report the violation to MA Div. of Banks in Massachusetts and file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov. Remember that you cannot be arrested or jailed for an unpaid consumer debt.
How do I stop a lender from taking automatic payments from my bank account?
Under federal Regulation E, you have the right to stop preauthorized recurring electronic debits by telling your bank or credit union at least 3 business days before the scheduled transfer date. Your bank may ask for written confirmation within 14 days of an oral request, and you should also notify the lender in writing that you are revoking authorization. Stopping automatic bank debits prevents further withdrawals, but it does not cancel the debt.
Small-dollar loan rules in neighboring states
How we get our numbers: We review the Massachusetts Small Loan Act, the Massachusetts Small Loan Rate Order / Small Loans Law, and published rules from MA Div. of Banks in Massachusetts to summarize statutory loan limits and licensing rules. For installment loans, we use the maximum all-in APR—including interest, origination fees, and permitted administrative charges—for three standard benchmarks ($500 for 6 months, $2,000 for 24 months, and $10,000 for 60 months), based on state statutes and the state-by-state surveys of the National Consumer Law Center (NCLC). Your CU Partner is an independent educational website, not a lender or loan broker, and does not provide legal advice. Because laws and regulatory interpretations change, please confirm current rules with MA Div. of Banks before borrowing.
Sources: Consumer Financial Protection Bureau (CFPB); National Credit Union Administration (NCUA); NMLS Consumer Access; Electronic Code of Federal Regulations — Regulation Z (12 CFR Part 1026); U.S. Census Bureau; National Consumer Law Center (NCLC).