A payday loan is a contract, and California law puts limits on what that contract can say. This guide explains your Fresno borrower rights under the state’s Deferred Deposit Transaction Law, what the rules do not cover, and what to do if a lender crosses the line. Payday loans are legal in California, but they are expensive, so it helps to know the rules before you sign anything.
Quick answer: California law caps a payday check at $300 with a fee of up to 15%, so the most cash you can receive is $255. It also limits you to one open loan per lender, bars criminal charges for nonpayment, and lets you complain to the DFPI at no cost. These Fresno borrower rights do not include a right to cancel after you sign, so decide before you sign.
Your rights start with the contract
When you take a payday loan in California, you write the lender a check and the lender gives you cash. The check is held until the due date. Because the check is the core of the deal, the law sets the biggest limits on the check amount, the term and the fee. Most of your protections come from California’s Financial Code, sections 23035 through 23037. If you want a plain explanation of how this kind of loan is built, read what a deferred deposit transaction is.
The right to a written agreement you can read
The payday agreement must be in the language mainly used to talk through the deal (Fin. Code 23035(g)). For consumer loans negotiated mainly in Spanish, Chinese, Tagalog, Vietnamese or Korean, California Civil Code 1632 also requires a translation. That matters in Fresno, where many families speak more than one language. Federal Truth in Lending rules also require the lender to show the finance charge and the APR before you commit. Never sign a blank or half-finished form, and keep a signed copy.
The right to a capped fee
A payday check can be for no more than $300, and the term can run up to 31 days (Fin. Code 23035(a)). The fee can be up to 15% of the check, which is $45 on a $300 check (Fin. Code 23036(a)). Because you write the check for the full amount including the fee, the most cash you can receive is $255. If a lender hands you less than that on a $300 check, ask them to explain every dollar.
A worked example of the real cost
Say you write a $300 check. The fee is $45, and you leave with $255. If the loan lasts 14 days, you pay $45 to use $255 for two weeks. That is about 17.6% of the cash you received, which works out to roughly 460% as an annual rate. Compare that with a small loan from a federal credit union: with a payday alternative loan, the interest is capped at 28% plus an application fee of at most $20. A $300 loan over three months would cost about $14 in interest plus up to $20, or about $34 in all. For more on why the APR looks so large, see APR versus interest rate.
One loan at a time, and no new loan to pay off the old one
A lender may have only one payday loan open with you at a time, and it may not make a new loan to pay off an existing one (Fin. Code 23036(c) and 23037(a)). This is the core of California’s approach to rollovers. If a lender suggests you take a fresh loan to cover the old one, that breaks the rule. Our page on California’s rule against extending payday loans goes deeper. Keep in mind that the one-loan limit applies to each lender, so check your own total across lenders before you borrow again.
Extensions and payment plans cannot add fees
If you cannot repay on the due date, you can ask the lender for more time. The lender does not have to agree. But if it does agree to an extension or a payment plan, it may not charge any additional fee for it (Fin. Code 23036(b)). Ask for the new terms in writing, with the new date and amount. If a lender says the extension costs another $45, that is a red flag, and you can report it.
One returned-check fee, and nothing more
If your check bounces, the lender can charge one $15 returned-check fee, and that is the only charge allowed for the bounced check (Fin. Code 23036(e)). Your own bank may also charge an overdraft or returned-item fee, which is separate. Before the due date, check your balance, and call your bank if you think the payment might fail. A missed payment can also trigger bank fees that add to the damage.
No cooling-off period after you sign
Many people assume they can change their mind within a few days. California’s payday law does not give you a set window to cancel once you sign. Some lenders may let you return the cash as a business choice, but you cannot count on it. Treat the moment before signing as your real decision point, and take the paperwork home if you need time. A bill you may hear about, AB 2558, has stalled and is not law.
No collateral and no criminal charges
A payday lender cannot take collateral for the loan (Fin. Code 23037(b)). Failing to repay is a civil debt, not a crime. The law bars criminal charges or criminal process against a borrower over a payday loan (Fin. Code 23035(b) and (d)(1)). So if someone says you will be arrested over an unpaid payday loan, that is a false threat. Write down who said it, when, and how, and report it.
Rules for debt collectors
California’s Rosenthal Act covers both original creditors and collection agencies, and it bars harassment, threats and deceptive tactics. Debt collectors must also be licensed by the DFPI. The federal Fair Debt Collection Practices Act adds more limits on collection agencies. Ask any collector for written proof of the debt, keep every letter, and do not hand over bank details by phone. If you served in the military, the Military Lending Act caps the cost of many loans to covered service members at 36% MAPR.
Lawsuits, garnishment and small claims
Creditors generally have four years to sue on a written contract. Your wages can be garnished only after a court judgment, and only within state limits. If you are sued, do not ignore the papers, because a default judgment makes things worse. You can also use small claims court yourself, for up to $12,500 as an individual, if a lender or collector has cost you money by breaking the law.
How to file a complaint
You can complain to the DFPI online at dfpi.ca.gov or call its consumer line at 1-866-275-2677. There is no fee and you do not need an attorney. Attach your agreement, receipts and a short timeline. You can also file with the federal CFPB at consumerfinance.gov/complaint. For a step-by-step walk-through, see how to file a complaint against a California lender.
Spotting a violation before you sign
Watch for these warning signs:
- A check for more than $300, or a fee above 15%.
- A term longer than 31 days on a payday loan.
- A new loan offered to pay off an old one from the same lender.
- A fee charged for an extension or payment plan.
- A refusal to give you the written agreement in your language.
- A lender who cannot show a California license. You can check one using the DFPI license search guide.
Cheaper options to try first
Before you borrow at $45 per $300, look at lower-cost choices. Ask your credit union about a small loan; EECU, based in the central San Joaquin Valley, serves many school employees, students, some local employers and family members, so confirm whether you qualify. Our page on credit unions versus payday lenders in Fresno has more. If the problem is a bill, call PG&E at 1-800-743-5000 or City of Fresno Utilities at (559) 621-6888 and ask for a payment arrangement. These calls are free and cost less than a fee.
Where to get help in Fresno
Central California Legal Services, at 2115 Kern Street, Suite 200, offers free legal help to people who qualify; call (559) 570-1200 or (800) 675-8001. For small claims questions, the free Small Claims Advisor at Fresno County Superior Court can be reached at (559) 457-2174. For other needs, dial 211 for Fresno County help, 24 hours a day.
Frequently asked questions
The law does not give you a right to cancel after signing. A lender may choose to allow it, but get that promise in writing, or decide before you sign.
No. The law bars criminal charges or criminal process against a payday borrower. A threat of arrest is a reason to file a complaint with the DFPI.
The fee can be up to 15% of the check, which is $45 on a $300 check. The most cash you can receive is $255.
No. A lender may not make a new loan to pay off an existing one, and it may have only one open loan with you at a time.
The lender may charge one $15 returned-check fee and no other charge for the bounced check. Your bank may add its own fees.
Creditors generally have four years to sue on a written contract. Wages can be garnished only after a court judgment.
File a complaint with the DFPI at dfpi.ca.gov or call 1-866-275-2677. You may also file with the CFPB. Neither costs anything.
This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the California Department of Financial Protection and Innovation (DFPI), and read the fee disclosure in full.