Payday Loans South Dakota

Learn about payday loan regulations in South Dakota with zaving.

Last updated by Zaving Editorial Team, on April 23rd, 2024

Are you in need of financial assistance in South Dakota? Whether it's covering unexpected expenses or managing bills, having access to reliable resources is important. Explore the payday lending laws in South Dakota and discover alternative options with zaving to address your financial needs efficiently.

What is a payday loan and can I get one in South Dakota?

A payday loan, also known as a cash advance, is a short-term borrowing option typically used by individuals to cover immediate expenses until their next paycheck. These loans are characterized by their high interest rates and fees, making them a costly form of credit.

In South Dakota, payday lending is effectively prohibited by law. State regulations dictate that no licensee may charge finance charges exceeding an annual rate of 36%, inclusive of all charges for ancillary products or services, as well as any other fees related to the extension of credit. Violation of this regulation is considered a Class 1 misdemeanor, and any loans made in violation of this law are deemed void and uncollectible.

The implementation of this 36% APR cap on payday loans, car-title loans, and high-cost installment loans in South Dakota was approved by voters in 2016. Prior to this, these types of loans carried charges exceeding 300% APR, significantly burdening borrowers with exorbitant costs. The enactment of this interest rate cap aimed to protect consumers from predatory lending practices and provide greater financial stability to residents of South Dakota.

What are the alternatives to payday loans in South Dakota?

In South Dakota, individuals facing financial difficulties have several alternatives to payday loans that they can explore:

  • Personal installment loans: Consider applying for personal installment loans from banks, credit unions, or reputable online lenders. These loans typically offer lower interest rates and more manageable repayment terms compared to payday loans, providing a better option for short-term financial assistance.
  • Credit union loans: Many credit unions in South Dakota offer small-dollar loans with more favorable terms than traditional payday loans. Members can inquire about these loan options, which often come with lower interest rates and flexible repayment plans.
  • Emergency assistance programs: Explore local community resources and government programs that provide emergency financial assistance to individuals in need. These programs may offer grants, vouchers, or low-interest loans to help cover essential expenses during times of financial hardship.
  • Financial counseling services: Seek guidance from nonprofit credit counseling agencies or financial counseling services available in South Dakota. These organizations can provide valuable assistance with budgeting, debt management, and finding alternative financial solutions to address immediate needs without resorting to payday loans.
  • Negotiate payment plans: Reach out to creditors or service providers to discuss setting up payment arrangements or requesting extensions on existing bills. Many creditors are willing to work with individuals to establish manageable repayment plans based on their financial circumstances.
  • Local charitable organizations: Consider contacting local charities, churches, or nonprofit organizations in South Dakota that offer assistance with basic needs such as food, housing, and utilities. These organizations may provide financial aid programs or referrals to other resources available to residents in need.
  • Support from friends and family: Seek assistance from trusted friends or family members who may be able to provide financial support during difficult times. Be sure to communicate openly about repayment terms and expectations to maintain healthy relationships while seeking financial help.

Can I take out a payday loan in another state?

To secure a payday loan, you must be a resident of the state where you're applying for the loan. Lenders typically verify your residency during the application process to ensure they comply with state laws and regulations. Attempting to obtain a loan from an out-of-state lender could lead to denial of the loan or potential penalties for providing false information. Therefore, your residency status is crucial in determining your eligibility for borrowing.

Moreover, payday lenders are usually licensed to operate only within the state or states where they're registered. This ensures that payday lending practices adhere to the laws of the state where the lending institution is established.

State laws govern various aspects of payday lending, including interest rates, fees, loan amounts, repayment terms, and the maximum number of loans a borrower can have at once. Each state has its own specific rules, so it's essential for borrowers to understand and comply with the regulations in their state of residence.

As of February 2024, payday loans are legal in 29 U.S. states: Alabama, Alaska, California, Delaware, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, Nevada, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.

However, payday loans are either prohibited or heavily restricted in the District of Columbia and the following states:

  • Arizona
  • Arkansas
  • Colorado
  • Connecticut
  • Georgia
  • Hawaii
  • Illinois
  • Maryland
  • Massachusetts
  • Minnesota
  • Montana
  • Nebraska
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Pennsylvania
  • South Dakota
  • Vermont
  • West Virginia

It's important for borrowers to carefully review these regulations before considering a payday loan.