Payday lending is not legal in Arkansas. There are no licensed storefront payday lenders operating in the state, and any short-term loan carrying the triple-digit annual percentage rate (APR) typical of a payday product is unenforceable here. The reason is built into the Arkansas Constitution: Amendment 89 caps the interest rate at 17% per year on any loan or contract that is not a government loan or a loan by an Arkansas-headquartered insured bank. A standard $15-per-$100 two-week payday loan works out to an APR near 400%, which is impossible to charge legally in Arkansas. In 2008 the Arkansas Supreme Court struck down the state law that had allowed payday lenders to operate, and by 2009 the industry had been shut down statewide. If someone is offering you a payday-style loan in Arkansas today, it is almost certainly an out-of-state or online operator charging an illegal rate — and under the constitution that loan is void as to principal and interest.
The Constitutional Rate Cap That Killed Payday Lending
Unlike most states, Arkansas writes its usury limit directly into its constitution rather than leaving it to the legislature. Amendment 89, approved by voters in November 2010 and effective January 1, 2011, replaced the older Amendment 60 rules. You can read the full official text in the enrolled resolution the legislature referred to the voters, Ark. H.J.R. 1004 (2009).
Section 3 of Amendment 89 is short and it is the whole ballgame: “The maximum lawful rate of interest on loans or contracts not described in Sections 1 and 2 shall not exceed seventeen percent (17%) per annum.” That is a flat 17% ceiling. It is not limited to “consumer” loans, and there is no floating “Federal Reserve discount rate plus 5 points” tier for business or non-consumer loans — that was the old Amendment 60 rule, and Amendment 89 did away with it. Anything a payday, title, or online cash-advance lender offers you falls under Section 3.
Amendment 89 carves out only two categories from the 17% cap:
Section 1 — government bonds and loans. Bonds issued by, and loans made by or to, Arkansas governmental units have no constitutional maximum rate.
Section 2 — Arkansas-headquartered insured banks. A federally insured depository institution with its main office in Arkansas is pegged to the rate that applied under 12 U.S.C. § 1831u as of March 1, 2009, not to 17%.
Neither carve-out helps a payday lender. This 17% ceiling is why Arkansas has no payday loan statute setting a maximum loan amount, term, or number of rollovers the way states that permit payday lending do. There is no way to structure a conventional payday loan under 17% and still make the business model work. The product does not legally exist here.
One currency note, because Amendment 89 can be changed: Section 11 lets the General Assembly amend it by a three-fourths vote of each house. Lawmakers have tried twice — S.B. 568 (2011) and S.B. 900 (2013) — and both bills died without passing. The text above is still the operative law.
How Arkansas Got Here: The Check Cashers Act and the McGhee Decision
For years, payday lenders in Arkansas operated under the Check Cashers Act, which the industry argued let it charge “fees” rather than interest, sidestepping the usury cap. In McGhee v. Arkansas State Board of Collection Agencies, No. 08-164, delivered November 6, 2008, the Arkansas Supreme Court rejected that argument, held that the fees were interest for constitutional purposes, and struck the Check Cashers Act down in its entirety.
Enforcement and the court decision worked in tandem, and the enforcement did not wait for the ruling. The Attorney General's office says on its own payday lending page that “since 2008, the Attorney General's office has worked to eliminate all forms of payday lending in Arkansas,” and that today “all storefront payday loan operations in Arkansas have been shut down.” By 2009 the last storefronts were gone. The combination of a hard constitutional cap and active enforcement is what makes Arkansas one of the strictest states in the country on this issue.
What Counts as an Illegal Loan — and What You Actually Owe
This is the part most borrowers get wrong, and it is the most important thing on this page. Amendment 89, Section 6(b) says: “All contracts under Section 3 having a rate of interest in excess of the maximum lawful rate shall be void as to principal and interest.”
Read that literally, because it means what it says. A payday-style loan from a non-bank lender at 200% or 400% APR is not merely stripped of its illegal interest — under the Arkansas Constitution the entire contract is void, principal included. The amendment is self-executing (Section 10), so it operates without waiting on the legislature. In practice:
A lender charging an unlawful rate on a Section 3 loan has no valid contract to enforce in an Arkansas court — not for the interest, and not for the money it advanced.
Do not assume you still owe the principal. That assumption is the single most common way Arkansans keep paying on debts the constitution has already voided.
An agreement to pay an unlawful rate does not become legal just because you signed it. You cannot “waive” the constitutional cap.
Amendment 89 applies to loans made after its January 1, 2011 effective date (Section 12), and it does not itself spell out a right to claw back usurious interest you have already paid. If you have already made payments on an illegal loan, that is worth having reviewed rather than assumed either way.
The cap looks at the substance of the transaction, not the label. Calling a charge a “fee,” “service charge,” or “membership” does not remove it from the interest calculation if its real function is the cost of borrowing money — exactly the point McGhee settled.
Online and Tribal Lenders: The Real-World Loophole
The most common way Arkansas consumers still encounter payday-style loans is online. The Attorney General's office puts it bluntly: though the storefronts are gone, “these usurious loans are still available on the internet.” Out-of-state internet lenders, lenders claiming tribal affiliation, and high-cost “installment” lenders market to Arkansas residents and typically claim that the law of their home state or tribe governs the loan, not Arkansas's.
Be skeptical of that claim. A non-bank lender making a Section 3 loan to an Arkansas resident does not get to write itself out of the Arkansas Constitution with a choice-of-law clause, and a license somewhere else is not permission to charge an Arkansan an unconstitutional rate. If you have one of these loans, you may have a complete defense — but get the specifics reviewed rather than assuming you owe the full amount.
The Important Exception: Banks and Federal Law
The 17% cap is not a universal rule that voids every debt above 17% APR, and you need to know where that line is before you stop paying anything.
Amendment 89 does not override federal law. Section 6(a) says the amendment “shall not be deemed to supersede or otherwise invalidate any provisions of federal law applicable to loans or interest rates.”
Federally insured banks can charge more than 17%. Under 12 U.S.C. § 1831d, a state-chartered FDIC-insured bank may charge the rate allowed by the law of the state where the bank is located, to a borrower anywhere — and a parallel rule (12 U.S.C. § 85) covers national banks. That is why a credit card or installment loan at 24% or 29% from a bank chartered in Delaware, South Dakota, or Utah is lawful as to an Arkansas borrower. It is not void, and not paying it will get you sued.
Arkansas-headquartered insured banks are exempt from the 17% cap by Amendment 89's own Section 2, as described above.
So the rule of thumb is not “anything over 17% is void.” It is: a loan above 17% from a lender that is not a bank — the payday, title, and online cash-advance operators — is a Section 3 contract and is void as to principal and interest. If you are unsure which bucket a debt falls in, ask before you act.
How the Federal Baseline Compares
There is no general federal cap on loan interest rates, which is why states like Arkansas matter so much. A few federal rules do set a floor of protection:
Military Lending Act (MLA): For active-duty servicemembers and their dependents, federal law caps most consumer credit at a 36% Military Annual Percentage Rate — still far above Arkansas's 17% ceiling.
Fair Debt Collection Practices Act (FDCPA): Governs how third-party debt collectors may pursue you, prohibiting harassment, false statements, and unfair practices, regardless of whether the underlying loan was legal.
Fair Credit Reporting Act (FCRA): Governs how loans and defaults are reported to credit bureaus and gives you the right to dispute inaccurate entries.
Wage garnishment:15 U.S.C. § 1673 caps garnishment of disposable earnings at the lesser of 25% of disposable earnings for that week, or the amount by which those earnings exceed 30 times the federal minimum hourly wage. Arkansas provides additional wage protection through its exemption process.
The takeaway: Arkansas's constitutional cap is far more protective than the federal baseline. Where federal law tolerates high-cost lending for civilians, Arkansas does not.
How to Enforce Your Rights
If you believe you are being charged an illegal rate or are being pursued on an unlawful loan:
Document everything. Keep the loan agreement, payment records, and all communications. The stated APR or fee schedule is usually enough to show the loan exceeds 17%.
Identify the lender. Is it a bank, or a non-bank payday/online/tribal operator? That single question decides whether Amendment 89, Section 3 voids the debt.
Do not assume the debt is valid. If it is a Section 3 loan above 17%, the constitution voids it as to principal and interest — you may owe nothing at all.
File a complaint with the Arkansas Attorney General. The Consumer Protection Division takes complaints against payday lenders and payday-loan debt collectors online, by phone at (501) 682-2007 or (800) 482-8982, or by mail at 101 West Capitol Avenue, Little Rock, AR 72201.
Consider legal help. Legal Aid of Arkansas and the Center for Arkansas Legal Services assist lower-income residents with debt and consumer matters at no cost. A private consumer attorney can also evaluate a usury claim.
Where to Verify
Confirm the current details before acting. The controlling source is the text of Amendment 89 of the Arkansas Constitution, published free by the legislature as H.J.R. 1004 of 2009 — Section 3 (the 17% cap), Section 2 (the Arkansas-bank carve-out), and Section 6 (federal law preserved; usurious Section 3 contracts void as to principal and interest). The Arkansas Attorney General's Consumer Protection Division publishes guidance on payday and predatory lending and handles complaints. Federal rate and garnishment rules are on the U.S. Code site maintained by the Office of the Law Revision Counsel. This article is general information, not legal advice; for advice about your own loan, talk to a lawyer.
Official Arkansas Sources
This page is based on Arkansas law. Limits and deadlines change — verify the current details directly with the official Arkansas sources below. This is general legal information, not legal advice.
Federal law also applies. Federal laws like the Fair Debt Collection Practices Act and Fair Credit Reporting Act protect you nationwide, on top of Arkansas’s own rules.
Frequently asked questions
Are payday loans legal in Arkansas?
No. Payday lending is not legal in Arkansas. Amendment 89 of the Arkansas Constitution caps interest at 17% per year on loans that are not government loans or loans by an Arkansas-headquartered insured bank, and a payday loan cannot exist under that ceiling. The Check Cashers Act that once allowed payday lenders was struck down by the Arkansas Supreme Court in McGhee on November 6, 2008, and the storefronts were gone by 2009.
What is the maximum legal interest rate in Arkansas?
A flat 17% per annum. Amendment 89, Section 3 says the maximum lawful rate on 'loans or contracts not described in Sections 1 and 2' shall not exceed 17% per year. The only exceptions are Section 1 (bonds and loans by or to governmental units, which have no cap) and Section 2 (loans by a federally insured depository institution with its main office in Arkansas, pegged to the federal rate applicable under 12 U.S.C. 1831u as of March 1, 2009). There is no 'Federal Reserve discount rate plus 5 points' tier for non-consumer loans; that was the old Amendment 60 rule, which Amendment 89 replaced effective January 1, 2011.
What happens if a lender charges more than 17% in Arkansas?
If it is a Section 3 loan, meaning any non-government, non-Arkansas-bank loan, which is what every payday, title, and online cash-advance loan is, then Amendment 89, Section 6(b) makes the contract 'void as to principal and interest.' The whole debt is void, not just the illegal interest. So do not assume you still owe the amount you borrowed. Amendment 89 is self-executing (Section 10) and applies to loans made after January 1, 2011. Calling the charge a 'fee' does not avoid the cap, which is the exact argument McGhee rejected.
So is any loan over 17% APR void in Arkansas?
No, and this exception is important. Amendment 89, Section 6(a) says the amendment does not supersede federal law, and Section 2 exempts Arkansas-headquartered insured banks from the 17% cap. On top of that, 12 U.S.C. 1831d (and 12 U.S.C. 85 for national banks) lets a federally insured bank charge the rate allowed by its own home state to a borrower anywhere. That means a 24% or 29% credit card from a bank chartered in Delaware, South Dakota, or Utah is lawful against an Arkansas borrower. It is not void, and refusing to pay it will get you sued. The void-as-to-principal-and-interest rule is aimed at NON-BANK lenders: payday, title, online, and purported-tribal operators.
Can online or tribal lenders make payday loans to Arkansas residents?
They market to Arkansans constantly. The Attorney General's office notes that although the storefronts are shut down, 'these usurious loans are still available on the internet.' But a non-bank lender making a loan to an Arkansas resident cannot write itself out of the Arkansas Constitution with a choice-of-law clause, and an out-of-state or tribal license is not permission to charge an unconstitutional rate. Such a loan is a Section 3 contract, and above 17% it is void as to principal and interest. Get the specifics reviewed rather than assuming you owe the full amount.
Who do I contact about an illegal loan in Arkansas?
File a complaint with the Arkansas Attorney General's Consumer Protection Division at arkansasag.gov/file-a-complaint, by phone at (501) 682-2007 or (800) 482-8982, or by mail at 101 West Capitol Avenue, Little Rock, AR 72201. Legal Aid of Arkansas and the Center for Arkansas Legal Services also help eligible residents with debt and consumer issues at no cost.
This article is general legal information, not legal advice, and may not reflect the most current law or the law in your jurisdiction. Laws vary by state and change over time. For advice about your specific situation, consult a licensed attorney.
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