Payday banned

Borrowing in Vermont: What State Law Allows

Vermont has some of the lowest interest limits in the country, and the state actively pursues online lenders that ignore them. Here's what licensed lenders may charge and what to do if an illegal lender contacts you.

By Lendmira Editorial Team Updated October 13, 2026 6 min read

Payday loans: Not allowed
Installment loan cap: 24% on first $1,000
Time limit to sue on debt: 6 years
Pay protected (credit debt): At least 85%

Map of the United States with Vermont highlighted

The short version

Payday and car title loans are not legal in Vermont: their prices far exceed the state's usury limits, and a lender needs a Vermont license unless it is federally regulated. Installment loans are capped at 24% a year on the first $1,000 and 12% above that, or an 18% APR overall, whichever is higher. Most debt lawsuits must be filed within six years, and at least 85% of your weekly take-home pay is protected from garnishment on consumer credit debts.

Vermont lending rules at a glance

Payday loans Not available Not licensed; rates exceed Vermont usury limits, so payday loans are illegal, including online

Car title loans Not available

Rate limit on small loans Installment loans: 24% on first $1,000 and 12% above, or 18% APR overall if higher

Time limit to sue on a debt 6 years written contract 6 years for credit card debt

Wage garnishment Credit debts: greater of 85% of weekly disposable pay or 40x federal min. wage exempt

Lender licensing and complaints Vermont Department of Financial Regulation · Look up a lender on NMLS

Payday loans are illegal here, even online

The Vermont Attorney General's office describes payday loans as small loans, often around $500, due in two to four weeks at rates typically above 300% a year. Those rates are far over Vermont's usury cap, and payday lenders don't hold the state license required to lend here. That is why you won't find payday storefronts in Vermont. The offers that do reach Vermonters come through internet ads, spam email, pop-ups and text messages promising "quick loans" or "EZ cash."

Car title loans run into the same limits, and no Vermont law authorizes them.

What a licensed lender may charge

Vermont's interest limits sit in Title 9, section 41a. The default rate is 12% a year unless another law allows more. For consumer loans, the main ceilings are:

Maximum rates under 9 V.S.A. § 41a
Type of loan	Maximum rate
Installment loans	24% a year on the first $1,000 and 12% on the rest, or an 18% APR on the whole balance, whichever is higher
Single-payment loans from lenders regulated under Title 8	18% a year
Any loan without a rate set by another law	12% a year

At those rates, a $1,000 installment loan repaid over 12 months costs about $135 in interest, not the hundreds of dollars a payday lender would charge for the same sum. Unless a lender is federally regulated, such as a bank or credit union, it needs a license from the Department of Financial Regulation (DFR) to lend in Vermont.

One exception to keep in mind: banks chartered in other states can often lend at the rates their home state allows, so an online offer from a bank, or from a company that partners with one, may carry a higher APR than these limits. Read the disclosure before you sign. Federal credit unions are held to an 18% APR ceiling on most loans, extended by their regulator through September 10, 2027.

If you need cash quickly, the Attorney General's office points to the United Way's Working Bridges income advance program through participating employers, and to credit unions. Our page on payday loan alternatives covers more options.

Watch for advance-fee scams

A legitimate lender does not ask you to pay before you get the loan. If a "lender" wants a fee wired or loaded onto a gift card first, stop contact. That pattern is one of the most common loan scams. Before you share any personal information, check the lender's license with DFR and see whether it appears on the department's Unlicensed Lender List.

Lawsuits, judgments and your paycheck

Vermont's general time limit for civil lawsuits, including suits on contracts and credit card debt, is six years after the claim arises (12 V.S.A. § 511). A collector can still contact you about an older debt, but it can't win a lawsuit if you raise the time limit. Read how statutes of limitations work before you make a payment on an old account.

Vermont protects more of your pay than federal law does. When a judgment comes from a consumer credit transaction, the larger of 85% of your weekly disposable earnings or 40 times the federal minimum hourly wage is exempt. For other judgments, the exempt amount is the larger of 75% or 30 times the federal minimum wage.

Where to get help

Unlicensed lenders: call DFR at (802) 828-3307 or email [email protected] with "Unlicensed Lender complaints" in the subject line.
Illegal lending: email the Attorney General's office at [email protected] with the lender's name, address and website.
Collection harassment: contact the Attorney General's Consumer Assistance Program, and read up on your rights with debt collectors.

Common questions

Are payday loans legal in Vermont?

No. Their rates exceed Vermont's usury limits and payday lenders aren't licensed here. Online payday offers to Vermonters are generally illegal.

What is the maximum interest rate on a personal loan in Vermont?

For installment loans, 24% a year on the first $1,000 and 12% on the rest, or an 18% APR on the whole balance, whichever is higher. Banks chartered in other states may follow their home state's rules.

How long can a creditor sue me for a debt in Vermont?

Generally six years after the claim arises, under Vermont's general limit for civil actions.

Can my wages be garnished in Vermont?

Yes, after a court judgment, but at least 85% of your weekly disposable earnings, or 40 times the federal minimum wage if that is more, is protected on consumer credit debts.

Sources

Facts on this page were checked against these sources on October 13, 2026. A 2025 bill to regulate earned wage access (H.99) had not passed as of that date.