The 18% Finance Charge Cap
Under Vermont's consumer lending statutes, a single-payment loan from a lender regulated under Title 8 cannot carry a finance charge above 18% per annum unless the lender holds a specific license permitting a higher rate. That ceiling is a fraction of what payday loans typically cost elsewhere, and it applies without the kind of loophole some other states have had to close after the fact.
A 2012 Law Widely Regarded as the Toughest in the Country
Vermont strengthened its consumer lending protections in 2012 in a way consumer advocates have repeatedly described as the strongest payday-loan law in the nation — the combination of the rate cap and enforcement drove storefront payday lenders out of the state entirely.
What's Actually Available
You won't find a licensed storefront or online payday lender advertising legally to Vermont residents under the traditional model. Short-term credit needs are generally met through personal installment loans, credit union products, or other options priced within the 18% ceiling.
| Factor | Vermont Rule |
|---|---|
| Finance charge cap | 18% per annum (absent special licensing) |
| Law strengthened | 2012 |
| Traditional payday loans | Not offered in the state |
| Reputation | Widely cited as one of the strictest laws nationally |
Since payday loans aren't a legal option in Vermont, comparing licensed personal-loan offers priced within the 18% cap is the practical path forward.
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