Personal Loans in Hawaii: What Licensed Lenders May Charge

How the Hawaii rate limit works

Section 412:9-302 gives a financial services loan company two ways to price a consumer loan. On a simple-interest loan, fixed or variable, the finance charge may not exceed an annual percentage rate of 24%, plus the charges the federal Truth in Lending Act leaves out of the finance charge. On a precomputed loan, where interest is paid or deducted in advance, the limit falls with each period of the loan.

Precomputed rates may be used only on loans of up to 48 months; a longer loan is held to 24% APR. Because interest deducted in advance means you receive less than the face amount of the note, the true APR on a precomputed loan is higher than the stated rate. That is why a $2,000 two-year loan can reach about 31% APR while the simple-interest cap is 24%. After maturity, unpaid principal may carry up to 24% a year unless your contract sets a lower rate.

How Hawaii compares

On the National Consumer Law Center's comparison of a $2,000 two-year loan, Hawaii's 31% is below the 34% median of states with a cap. Alaska also sits at about 31% and California at about 25%. On a $10,000 five-year loan, Hawaii's 24% compares with a median of 27%. The state rules map shows every state side by side.

Who needs a license

Section 412:9-101 bars anyone, except as federal law or chapter 412 expressly permits, from making loans at rates above those the law otherwise allows without a financial services loan company license. The license holder must be a Hawaii corporation, except that a nondepository financial services loan company need not be incorporated in Hawaii.

• Banks and credit unions answer to separate charters and regulators, and a bank may charge the rates its home state allows.
• Online lenders that partner with a bank may make loans through that bank. Ask who the lender of record is, since that decides which cap applies.
• Small-dollar installment lenders need a separate license under chapter 480J, created by Act 56 of 2021.

Small-dollar loans since 2022

Act 56 of 2021 repealed Hawaii's payday lending law and created a license for installment lenders, formerly payday lenders, starting January 1, 2022. The DFI describes these as loans of up to $1,500, repaid over up to 12 months, at an interest rate of up to 36%. For more on small-dollar and payday loans, our sister site Lendmira has a Hawaii page.

Check a lender and file a complaint

1. 1 Check the lender on the DFI's list of regulated companies before you apply.
2. 2 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees. How to verify a lender lists other warning signs.
3. 3 File a complaint through the Department of Commerce and Consumer Affairs File a Complaint page, or call the DFI at (808) 586-2818 or 1-844-808-3222, 7:45 a.m. to 4:30 p.m. Hawaii time, Monday to Friday.
4. 4 Write to the DFI at P.O. Box 2054, Honolulu, HI 96805, if you prefer mail.
5. 5 Send a complaint to the CFPB as well if the lender is a bank or a bank partner.

Questions people ask