A Rate Cap in the State Constitution
Article 19, Section 13 of the Arkansas Constitution sets the maximum lawful interest rate on consumer loans at 17% per annum. Unlike a statutory cap that a future legislature could adjust, this rate is embedded in the constitution itself — described as the ultimate expression of the state's public policy on lending.
The Check Cashers Act and Its Downfall
In 1999, the Arkansas Legislature passed the Check Cashers Act to license and regulate deferred-presentment (payday loan) businesses — which in practice legitimized rates far above the constitutional 17% cap. Consumer advocates challenged the law, and after nine years of litigation, the Arkansas Supreme Court ruled on November 6, 2008, that the Check Cashers Act violated the state constitution's usury limit.
What This Means Today
Payday lending has been effectively prohibited in Arkansas since that 2008 ruling. Any lender or online broker advertising a payday loan to an Arkansas resident at a rate above 17% is operating outside state law, regardless of how the product is marketed or where the lender is based.
| Factor | Arkansas Rule |
|---|---|
| Constitutional usury cap | 17% APR (Ark. Const. art. 19, § 13) |
| Check Cashers Act | Struck down by Arkansas Supreme Court, 2008 |
| Traditional payday loans | Effectively prohibited |
| Unique feature | Only state with a constitutional usury cap |
Since payday loans above the constitutional cap have no legal path in Arkansas, comparing licensed personal-loan offers priced within the 17% ceiling is the realistic starting point.
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