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Payday lending was repealed here, effective January 2022. What replaced it: instalment loans up to $1,500 at 36%, with a hard ceiling of 50% of principal on total charges.
House Bill 1192, effective 1 January 2022
The state’s Division of Financial Institutions puts it plainly: payday lending laws were repealed, meaning consumers can no longer obtain these high-cost loans. In their place, licensed lenders may offer small dollar installment loans of up to $1,500 over up to 12 months at up to 36%.Hawaii · RegulatorHawaii DFI — payday lending laws will be repealed, meaning consumers can no longer get these high cost consumer loans; instead small dollar or installment loans will be offered at an interest rate of up to 36%
HB 1192 passed the legislature unanimously and was signed in June 2021. Before it, Hawaii permitted balloon-payment loans carrying APRs up to 460% — borrowing $500 over four months cost about $700 in finance charges.Hawaii · ResearchPew Charitable Trusts — before these reforms Hawaii law permitted unaffordable balloon-payment loans carrying APRs of up to 460%; to borrow $500 over four months a customer would pay $700 in finance charges
Hawaii Revised Statutes as amended by HB 1192 (2021)
HB 1192 provides that any loan made without the required licence is void — and that no principal, interest, fees or other charges may be collected in connection with it.
The definition of “installment lender” is deliberately broad, reaching anyone who arranges a loan for a third party or acts as an agent for one, regardless of whether that third party is itself exempt from licensing, and by any method including internet or telephone. That language is aimed squarely at the bank-partnership model.
Loans must be repayable in substantially equal, consecutive instalments of principal and interest — fortnightly, twice monthly or monthly. Minimum term is two months for loans of $500 or less and four months above that; maximum is 12 months.
On top of the 36% sits a monthly maintenance fee of $25 to $35 depending on principal. But there is a hard backstop: total loan charges may not exceed 50% of the principal. Repayment cannot be secured by a lien on your property.
Not everyone reads this as unambiguous progress. The National Consumer Law Center noted that while Hawaii repealed its payday loan law, the replacement increased the allowable APRs for installment loans of up to $1,500.Research · National Consumer Law CenterPredatory Installment Lending in the States (2022) — Hawaii repealed its payday loan law but replaced it with a new law that greatly increases the allowable APRs for installment loans of up to $1,500
Both things are true: a borrower who would previously have taken a 460% balloon loan is better off, and the ceiling for instalment lending rose. Which matters more depends on which product you were going to use.
You can revoke authorisation and instruct your bank to stop the payment, whatever your agreement says.
What Regulation E says about automatic payments →
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A payday loan is a consumer debt. If it goes unpaid, two Hawaii rules decide what a lender can do next: how long it has to sue you, and how much of your pay a court can order taken.
Being sued over an old payday loan? A collector can still file, but the time limit is a defence you can raise — and you cannot be jailed for the debt. What can and cannot happen if you don’t pay →