Where Borrowers Face the Highest Interest Charges in the US

In parts of the United States, borrowers face crippling interest charges that make even basic credit access a costly gamble.

From payday loans with triple-digit APRs to car title loans that trap users in endless debt cycles, state-level regulation—or the lack thereof—plays a major role in just how much interest borrowers pay.

According to the Consumer Financial Protection Bureau (CFPB), borrowers in states with little or no interest caps routinely pay annual percentage rates (APRs) exceeding 400%, especially for short-term loans like payday or title loans.

These rates are legal in over a dozen states, despite decades of evidence showing they contribute to cycles of financial instability rather than alleviating them.

The Worst States for Borrowing: Where Interest Rates Soar

Across the country, lending laws vary widely, leading to major discrepancies in how much borrowers pay in interest—even for the same loan amount and duration.

According to the Center for Responsible Lending, states like Texas, Wisconsin, Idaho, and South Dakota permit payday and car title lenders to charge some of the highest APRs in the country, often surpassing 500%.

States With the Highest Payday Loan APRs (2024–2025)

Source: Center for Responsible Lending, Pew Charitable Trusts, CFPB (2024)

In contrast, 15 states plus D.C. have banned payday lending outright or imposed interest caps around 36% APR, which consumer advocates recommend as the maximum safe threshold.

For comparison, credit card APRs hover around 20.1%, while federal student loan APRs are under 8% for undergraduates.

The Structure Behind Triple-Digit Rates

Average annual interest rates on payday loans:

Delaware: 521%
Idaho: 652%
Nevada: 652%
Texas: 661%
Utah: 652%
Wisconsin: 574%

It’s time to end exploitative lending that keeps Americans trapped in debt. We will cap interest rates on consumer loans and credit cards at 15%.

— Bernie Sanders (@BernieSanders) May 10, 2019

According to The Pew Charitable Trusts, the typical payday loan in the U.S. is around $375, designed to be repaid in two weeks, often in full, along with a fee of approximately $55. At first glance, that fee may seem manageable—until you consider what happens next.

The majority of payday loan borrowers aren’t able to repay the full amount on time. In fact, nearly 80% of payday loans are rolled over or followed by another loan within two weeks, according to Pew.

Most borrowers get caught in a cycle of debt, renewing the loan 7 to 10 times, which transforms the original $55 fee into $400–$600 in total interest and fees, depending on the state. This effectively turns a $375 loan into an over $900 repayment burden.

What makes this worse is the structure and terms of these loans. In states without strict interest rate caps, lenders are legally allowed to add on processing fees, late payment penalties, and refinance fees.

Borrowers often aren’t told clearly what each fee represents, making it nearly impossible to understand the real cost of the loan until it’s too late.

In many cases, lenders have access to the borrower’s bank account, meaning they can withdraw funds on payday, even if it leaves the borrower with insufficient funds for essentials or other bills. This practice frequently leads to overdraft fees, which further compound the borrower’s financial burden.

Car Title Loans: Interest With Your Car as Collateral

Payday loans are not the only form of predatory lending plaguing U.S. consumers. Car title loans are another high-cost product that targets cash-strapped individuals—this time by using their vehicle as collateral.

These loans are legal in roughly 16 states, and are especially prevalent in Texas, Nevada, Georgia, Arizona, and New Mexico.

According to the Consumer Federation of America, the average APR on a car title loan ranges from 300% to 480%, depending on state regulations and lender practices.

These loans are usually due in 30 days, and like payday loans, many borrowers cannot repay them on time. Instead, they renew the loan multiple times, each time incurring new fees and interest charges.

What makes car title loans especially risky is that failure to repay means repossession of the borrower’s vehicle—even if they only borrowed a small fraction of the car’s value. In fact, one out of every five car title loan borrowers ends up losing their car, often their only means of getting to work, school, or essential services.

According to a 2022 CFPB report, over 70% of vehicle repossessions in the car title loan industry occur after a series of renewals, not because of the borrower’s initial inability to pay, but because of compounding interest and fees over time.

A Borrower’s Lifeline—or a Debt Trap?

Online lending has exploded in recent years, offering borrowers easy access to loans from their phones or computers. But the convenience can hide risk.

If you’re considering a short-term loan and want to understand how much you might repay, you can use tools on sites like 1FirstCashAdvance.

The platform lets you see what borrowing $200, $500, or even $1,000 could really cost based on your state. It also walks you through how APR works and what to expect from different lenders.

While this doesn’t eliminate high fees, it empowers borrowers to make informed choices—and may steer them toward installment loan options with better repayment terms.

States With Safer Borrowing Conditions

Some states have made significant strides to protect consumers:

States With Strong Loan Interest Protections (2025)

Who Is Most Affected?

Borrowers who use payday and title loans are overwhelmingly:

The Federal Reserve reports that 37% of Americans cannot cover a $400 emergency expense without borrowing or selling something. This makes them particularly vulnerable to high-cost loans when payday hits.

Final Word

Where you live in the U.S. could determine whether a $500 loan costs you $50—or $500 in interest alone.

States like Texas, Wisconsin, and Idaho continue to be hotspots for extreme lending practices, while others like Colorado, New York, and Illinois have made strong reforms to protect their residents.

Until federal caps are implemented or more states act to reform high-cost lending, understanding your local laws—and using trustworthy tools like 1FirstCashAdvance to explore loan options—is essential for navigating the credit landscape.