Act 56 Ended Traditional Payday Loans
Any payday loan contract signed after January 1, 2022 is illegal in Hawaii. Act 56 phased out the old deferred-deposit check-cashing model — where a lender held a postdated check for a fee up to 15% of its face value — and replaced it with a licensed small-dollar installment loan framework.
What's Legal Now
Under Act 56, licensed lenders can offer installment loans up to $1,500, repayable over 2 to 12 months, with the total cost of the loan capped at 36% APR. That's a dramatically different structure than the old two-week, lump-sum payday model — more time to repay, and a real ceiling on the total cost.
Licensing Requirement
Every lender making these small-dollar loans to Hawaii residents must be licensed under the state's consumer lending framework and follow the new installment and rate rules — unlicensed short-term lending, and any structure resembling the old payday product, is prohibited.
| Factor | Hawaii Rule |
|---|---|
| Traditional payday loans | Illegal since January 1, 2022 (Act 56) |
| Legal alternative | Installment loans up to $1,500 |
| Rate cap | 36% APR |
| Repayment term | 2–12 months |
Since the old payday model no longer exists in Hawaii, comparing licensed installment loan offers within the 36% cap is the accurate starting point for anyone researching short-term borrowing here.
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