Maryland

Payday loans are currently prohibited in the state of Maryland. This is due in part because of the small loan interest rate caps Maryland has. Right now, Maryland has a 33% loan APR rate cap on small consumer loans.

Maryland’s Senate Joint Resolution 7 is different than other resolutions that prohibit payday loans. In Maryland, SJR 7 stops out-of-state payday loan companies from chartering with local banks. A lot of times payday loan companies contract with banks to avoid state regulations on small loan rate caps. As a result, they can charge higher interest and fees on their payday loans.

Maryland is just one of 21 states that prohibit lending institutions from lending payday loans to their customers. The Senate Joint Resolution 7 was set into motion in the 2002 regular session, and it has since passed. Maryland’s resolution is currently one of the only Senate resolutions that keep out-of-state lenders from setting up their lending services in their state. Maryland legislation based their decision to set up laws that prohibit payday loans primarily because of the declining economy and drop in consumer confidence.

Just recently the Attorney General in Maryland brought suit against Cash-2-You Leasing, a Maryland company that violated the small cap interest rate of Maryland. The suit alleges that the company evaded Maryland’s usury laws that cap rates at 33% APR by selling their customers a household item. For a $200 payday loan, consumers were required to write a check in the amount of $260. That equates to an APR of 780%!