Personal Loans in Pennsylvania: What Licensed Lenders May Charge

How the Pennsylvania limit works

Pennsylvania does not license personal-loan companies under a general small-loan law. A business corporation that makes or negotiates non-mortgage loans to consumers holds a license under the Consumer Discount Company Act (CDCA), and the act's own schedule of charges limits what it may collect. DoBS applies the act through its regulations in Chapter 41 of the Pennsylvania Code.

The act's charges are not written as one APR, so the figure on your Truth in Lending disclosure is the number to compare. The federal APR counts interest and the fees that are finance charges, which is how the comparison below is built.

Here is how to use that number. A $10,000 loan at 14% for 36 months, with a 5% fee taken from the loan, deposits $9,500 and costs $341.78 a month. Its APR is 17.65%, well under the ceiling for a loan that size. The figures are an example, not an offer.

Who needs a license and who does not

Consumer discount companies apply through the DoBS licensing portal rather than through NMLS, and DoBS lists them in its public institution search. DoBS has also issued an interpretive letter on internet and out-of-state lending under the act, so an online lender that is not a bank should be able to show you a Pennsylvania license.

• Banks and credit unions answer to their own charters and banking 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, which can put the loan outside the CDCA limits. Ask who the lender of record is.
• Payday and auto title loans are a separate topic. Our sister site Lendmira covers them on its Pennsylvania lending laws page.

How Pennsylvania compares with its neighbors

On the National Consumer Law Center's comparison of a $2,000 two-year loan, Pennsylvania's limit of about 24% APR is at or below every neighbor. New York caps that loan at about 25%, New Jersey and Maryland at about 30%, Ohio at about 31% and West Virginia at about 33%; Delaware sets no cap. Your state of residence and the lender's license decide which rules apply. The state rules map shows every state side by side.

What to check before you sign

• The APR and total of payments on the federal disclosure. On a licensed loan, an APR far above the figures on this page is a reason to ask how the lender is licensed.
• Add-on products such as credit insurance. Ask for the price with and without them; credit insurance and add-ons explains how they change the cost.
• Upfront fees. A demand for a fee before the loan is approved or funded is a warning sign, whatever the state.

Check a lender and file a complaint

1. 1 Look up the license in the PA Financial Institutions Search on the DoBS portal before you apply; consumer discount companies are listed there.
2. 2 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
3. 3 Complain to DoBS through the DoBS Portal, which its Consumer Help Center page links, or call 1-800-PA-BANKS (722-2657).
4. 4 Send a complaint to the CFPB as well if the lender is a bank or a bank partner. How to verify a lender lists what to check.

Questions people ask