Personal Loans in Washington: What Licensed Lenders May Charge

How the Washington rate limit works

RCW 31.04.105 sets one flat rate for every loan size, computed by the simple interest method, plus a limited set of charges. The origination fee is prepaid and nonrefundable, and it may be added to the loan balance.

Here is how the pieces combine. Borrow $2,000 for 24 months at 25% with an $80 origination fee added to the balance: the payment is $111.01, you repay $2,664.24 in all, and the APR on your Truth in Lending disclosure comes to about 29.2%. These figures are an example, not an offer.

The 2024 Predatory Loan Prevention Act

In 2024 Washington amended the scope section of the Consumer Loan Act, RCW 31.04.025, through an act titled the "predatory loan prevention act." It applies to loans made on or after June 6, 2024, and to older loans renegotiated or modified after that date.

• Predominant economic interest: a company that claims to act as an agent or service provider for an exempt party, such as a bank, is treated as the lender if the loan's rate is higher than Washington allows and the company holds, acquires or keeps the predominant economic interest in the loan.
• Totality of the circumstances: the company is also treated as the lender if the circumstances show it is the lender and the deal is structured to evade the chapter.
• No subterfuge: the act bars any device, subterfuge or pretense to evade the chapter, including arranging a loan at a higher rate.

The burden of proving an exemption is on the company that claims it. The practical effect: a nonbank company that holds the predominant economic interest in a bank-partner loan to a Washington resident can be held to the Consumer Loan Act, including its 25% limit.

Who needs a license and who does not

RCW 31.04.035 says no one may engage in any activity covered by the chapter without first getting and keeping a license. The chapter covers loans made to Washington residents or people physically in the state. A consumer loan made without a required license is void and unenforceable.

• Banks, savings banks, trust companies and credit unions doing business under the laws that govern them are exempt, and a bank may charge the rates its home state allows.
• Business, commercial and agricultural loans are exempt unless they are secured by the borrower's primary home.
• Payday and auto title loans are a separate subject. Our sister site Lendmira covers them on its Washington lending laws page.

On the NCLC comparison of a $2,000 two-year loan, Oregon allows about 36% APR, while Idaho has no numeric cap and relies on an unconscionability standard. The state rules map shows every state side by side.

Check a lender and file a complaint

1. 1 Look up the license on the DFI's verify a license page or in NMLS Consumer Access before you apply.
2. 2 Check the APR on the disclosure. If a nonbank offer is well above about 29% on a small loan, ask under what authority the company lends to Washington residents.
3. 3 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
4. 4 Complain to the DFI on its complaint page or by phone at 1-877-746-4334, Monday to Friday, 8 a.m. to 5 p.m. Pacific.
5. 5 Send a complaint to the CFPB as well if the lender is a bank or a bank partner, or if you are unsure who regulates it.

If a lender asks for a fee before it will approve or fund the loan, treat it as a warning sign; how to verify a lender explains what to check.

Questions people ask