Borrow $500 in Ohio. Have your cousin borrow the same $500 in Idaho. You're now playing by two different rulebooks.
Most people figure there's one national standard for personal loans. There isn't. For small installment loans, the states write most of the rules. And the last two years? Those rules have been moving.
Some states tightened up. A few loosened. Washington backed off enforcement. And newer stuff, like paycheck-advance apps and buy now, pay later, is suddenly getting its own laws.
So here's where things stand heading into 2027. And what it means for you if you ever need to borrow.
Key takeaways
- States, not Washington, set most of the rules for small installment loans. They vary a lot.
- For a $500 loan, 19 states plus Washington, D.C. cap rates at 36% or lower. Others allow more, or use a different standard.
- Federal enforcement on small-dollar loans dropped hard in 2025. State attorneys general picked up the slack.
- At least 12 states now have laws for earned wage access, the "get paid early" apps.
- New York proposed the first full licensing rules for buy now, pay later.
- Best habit for borrowers: make sure the lender is licensed in your state before you apply.
There's no single national rulebook
The National Consumer Law Center tracks how every state handles installment loans. Its latest report came out in December 2025. It looked at two test loans: $500 over six months, and $2,000 over two years.
Here's how the states split on the $500 loan:
- 19 states plus D.C. cap the APR at 17% to 36%
- 13 states cap it at 37% to 60%
- 13 states allow more than 60%
- 3 states (Idaho, Utah, and Wisconsin) skip the hard number and say loans can't be "unconscionable"
- 2 states (Delaware and Missouri) have no cap at all
The $2,000 loan is different. More states cap that one at 36% or less, 31 plus D.C. And five states, including Idaho, South Carolina, Utah, and Wisconsin, use the unconscionability standard.
What's "unconscionable"? Basically, a loan so one-sided a court would call it grossly unfair. It's a judgment call, not a number. Lenders in those states still need a license. They still have to give disclosures. And they still answer to the state's consumer credit code.
So how much can a lender charge? Depends. Which state you're in, and how big the loan is.
The states that moved recently
Legislatures don't sit still. Per the same NCLC report, here's what changed from mid-2024 on:
- Tennessee raised its rate cap from 30% to 36%. Allowed origination fees went from 10% to 12.5%.
- Mississippi pushed the expiration date on its high-rate loan law out to 2030. It raised loan size limits, too.
- Oklahoma and Texas caps went up with inflation.
- Missouri lets lenders pass along credit report fees now.
There's more in the pipeline. In December 2025, Wisconsin lawmakers introduced Senate Bill 759. It would cap APRs at 36% for licensed lenders. It would also add a "true lender" test, meant to stop companies from routing loans through partners to dodge state licensing. It hasn't become law.
Washington stepped back. States stepped in.
For most of the last decade, the Consumer Financial Protection Bureau was the main federal referee on small-dollar loans. Then 2025 happened.
In March 2025, the CFPB said it wouldn't prioritize enforcing its small-dollar lending rule. A year-end review by the law firm Goodwin counted one federal enforcement action in this area for 2025. The year before? Fifteen.
But somebody's still watching. State attorneys general stayed busy. New York won a judgment of more than $1 billion against a group of merchant cash advance companies. It also sued two earned wage access companies over fees it said worked out to 350% to 750% a year. Baltimore sued an app over "tips" it called disguised fees.
Bottom line for borrowers: your state's rules matter more right now than they have in years. So does your state regulator.
Congress is still talking about caps
Congress hasn't gone quiet. In September 2026, two House members, one Republican and one Democrat, introduced the Veterans and Consumers Fair Credit Act. Active-duty service members already get a 36% limit under the Military Lending Act. This bill would extend it to most consumer credit. In the Senate, Sen. Jack Reed introduced a similar bill, the Predatory Lending Elimination Act, in February 2026.
Both are just proposals. Neither has passed. Bills like these have stalled before. Still worth knowing about, though. If one moved, the whole map would change.
A courtroom fight over whose rules apply
There's a quieter fight going on in federal court. It could matter just as much.
Federal law generally lets banks "export" their home state's interest rates to borrowers anywhere. But the same law lets states opt out. Colorado passed a law to do that in 2023. The goal: apply Colorado's own rate caps when out-of-state, state-chartered banks lend to Colorado residents.
In November 2025, a federal appeals court panel sided with Colorado. Then in April 2026, the full Tenth Circuit agreed to rehear the case, which wiped out that ruling for now. The full court hasn't decided yet. Twenty-one states filed briefs backing the challengers. Consumer groups and former regulators lined up behind Colorado. However it lands, other states will be watching.
Paycheck-advance apps are getting their own rules
Earned wage access, or EWA, lets you pull pay you've already earned before payday. It's grown fast. So have the questions.
At least 12 states have passed EWA laws or rules: Arkansas, California, Connecticut, Indiana, Kansas, Louisiana, Maryland, Missouri, Nevada, South Carolina, Utah, and Wisconsin. They don't all agree. California, Connecticut, and Maryland treat EWA as a form of credit. Missouri and Nevada make providers get licensed. And Maryland went further this year. Starting October 1, 2026, EWA providers there can't ask for tips. They also have to offer a free option.
Washington weighed in, too. In December 2025, the CFPB said some employer-based EWA products aren't credit under the Truth in Lending Act. Then on June 30, 2026, the House Financial Services Committee voted 29-22 to advance the Earned Wage Access Consumer Protection Act. It would set national rules, including a required free option and a ban on late fees.
Use one of these apps? Find out which category yours falls in. It changes what disclosures you get, and what happens if a payback bounces.
Buy now, pay later is next
BNPL used to live in a gray zone. New York's changing that.
In February 2026, the state proposed the country's first full licensing setup for BNPL lenders. Licensing. Limits on late fees and convenience fees. Clearer notice about credit reporting. Rules for handling complaints. Once it's adopted, providers get 180 days to comply.
Other states are watching. Don't be surprised if it spreads.
What all of this means if you need to borrow
That's a lot of moving parts. For an everyday borrower, though, a few habits cover most of it.
Check the license first. Most states let you look up licensed lenders through the state regulator or the NMLS Consumer Access website. A real lender will tell you which states it's licensed in, and it won't make you dig for it. If you're shopping around, start with licensed installment loans in your state. That way you know which rules protect you.
Read the disclosures. Licensed lenders have to show you the cost of credit in writing before you sign. Look at the total you'll pay back. Not just the payment.
Compare the product, not just the price. A credit card, an EWA advance, a BNPL plan, and an installment loan all work differently. Each has trade-offs, depending on how fast you can pay it off.
Know your regulator. If something goes wrong, your state's financial regulator or attorney general is usually where you file a complaint. In 2025, they did most of the enforcement work anyway.
The bottom line
Small-loan rules in the U.S. are a patchwork. And it's still shifting. Federal oversight eased up in 2025. States filled the gap. New products get new laws almost every session.
No reason to panic. It's just a reason to spend five extra minutes before you borrow. Check that the lender's licensed where you live. Read what they're required to tell you. Pick the option you can actually pay back.
The rules will probably keep changing. That habit won't have to.
