Alabama Payday Loan Laws, Explained
Last updated: July 20, 2026
Key takeaway
Key takeaway: Alabama regulates payday lending as its own distinct category, separate from the state's general usury rules — with a specific dollar cap, a percentage-based fee, and a limited allowance for rolling a loan over once.
The Deferred Presentment Services Act
Alabama's payday lending is governed by Title 5, Chapter 18A of the state code — the Deferred Presentment Services Act — enforced by the State Banking Department's Bureau of Loans. It caps a single loan at $500 regardless of how many lenders or transactions are involved, with a maximum finance charge of 17.5% of the amount advanced — $87.50 on a $500 loan.
Loan Term and Rollover Rules
An Alabama payday loan must run between 10 and 31 days, and state law permits exactly one rollover or renewal of an existing loan — not unlimited rollovers, which is a meaningful guardrail compared to states with no rollover limit at all.
Enforcement
The Bureau of Loans enforces the Deferred Presentment Services Act and can discipline lenders that violate it, including financial penalties and license revocation — worth knowing if you ever need to file a complaint about a lender operating in the state.
| Factor | Alabama Rule |
|---|---|
| Maximum loan amount | $500 |
| Finance charge cap | 17.5% of amount advanced |
| Loan term | 10–31 days |
| Rollovers permitted | 1 |
Because Alabama permits one rollover, it's worth understanding upfront what a renewal would cost before you need to use it — that's often where total cost climbs fastest.
Sources: NCSL — Payday Lending State Statutes · CFPB — Payday Loans
Alabama Payday Loan FAQ
Are payday loans legal in Alabama?
Yes. Alabama regulates payday loans as their own category, allowing loans up to $500 with a finance charge capped at 17.5% of the amount advanced.
How much can you borrow with a payday loan in Alabama?
The maximum is $500, with loan terms running 10 to 31 days.
Can you roll over a payday loan in Alabama?
One rollover is permitted. Alabama also uses a statewide database to limit how many loans a borrower can stack at once.
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