Most vs fewest: where payday lenders cluster, and where they vanish

Counting storefronts by raw number tells you where the people are. Counting them per resident tells you where the rules are. By population, payday lenders pile up in the states that let rates run high and disappear entirely in the 15 that cap them, where the count is not low but zero.

Why It Matters

The number of payday lenders varies widely across the U.S. In some states, there are no payday loan stores at all, while others have nearly 15 stores per 100,000 residents. State size isn’t a major factor in this — instead, research shows lender concentration tends to be highest in states with high or no APR caps and lighter regulation.

Payday stores also tend to cluster more heavily in low-income and minority neighborhoods. That concentration matters because it shapes how much access — and how much exposure — people in those communities have to short-term credit, often without many lower-cost alternatives nearby.

Over the past few years, we’ve received numerous requests from borrowers in the highest-rate states. Many turn to payday loans when emergencies hit, often because it’s the option that’s most available to them. Our analysis of their financial behavior found that relying on high-interest payday loans without a clear repayment plan can lead to financial instability and added stress.

This is a pattern worth understanding, not just avoiding. 1F Cash Advance wants to help consumers understand what drives payday loan availability in their area and make more informed borrowing decisions — knowing where lenders cluster, why rates vary by state, and what to weigh before taking on this kind of credit. Our research also points to the value of stronger consumer protections and greater financial education, especially in the communities where payday lending is most concentrated.

Executive Summary

Where payday lenders cluster is a question with two different answers depending on how you count. By raw number, the biggest states host the most stores: California alone accounts for roughly 10% of all payday storefronts in the country.⁴ But raw counts mostly track population. The more revealing measure is stores per resident, and there the pattern is regulatory.

Pew’s analysis of regulatory and Census data found that states with the highest rate caps carry a median of about 14.9 payday stores per 100,000 residents, against 3.0 in the states with the lowest caps that still permit the product, and zero in the 15 states plus DC that prohibit payday lending or cap it at 36%.¹ The Federal Reserve’s location study reached the same conclusion from county data: per-capita lender density is highest in states such as Alabama, Mississippi, and Tennessee, and is shaped by state law alongside local demographics.³ Fewer lenders does not mean less access. When Colorado tightened its rules, half the stores closed but each survivor served far more customers, and borrowing barely changed.⁶

Our Research Approach

The 1F Cash Advance research team analyzed how payday lender concentration correlates with borrowing terms, to help borrowers understand what shapes the cost and availability of payday loans in their area. Here’s how we gathered and analyzed the data:

• Determining the core problem and goal. We analyzed customer requests over the past few years and found that payday loans have a more severe financial impact in states with high APR caps, largely due to their greater availability. The goal is to help borrowers understand where and why lenders cluster, so they can make more informed, confident loan decisions.
• Information collection. Our finance experts compiled the latest available data from regulatory filings, supervisory reports, and Census data. They relied heavily on Pew Charitable Trusts reports, a Federal Reserve location study, the California DFPI’s annual payday report, an article from the Milken Institute Review, and CFPB payday-rule research.
• Metrics analysis. 1F Cash Advance experts found the median number of payday stores per 100,000 residents across different states and grouped them by the average payday loan rate. Then, they compared the number of payday lenders in states with high APR caps to those that prohibit payday lending or set 36% APR caps to show how relaxed regulations affect the concentration of payday lenders, while strict APR caps result in few or no payday loan stores. They also analyzed how race, education, creditworthiness, and access to banking services affect communities and their financial choices.
• Creating borrower-focused content. We broke down complex financial and legal information into plain language to help borrowers understand how rates and access vary by location, so they can approach short-term borrowing with clearer expectations and more confidence.

Methodology and Sources

Lender-density figures come from non-commercial primary sources: the Pew Charitable Trusts’ analysis of state regulatory filings and U.S. Census Bureau American Community Survey data, the Federal Reserve’s study of payday-lender locations using county-level data, the California Department of Financial Protection and Innovation’s annual regulator filings, and the Milken Institute Review. Density is reported as median stores per 100,000 residents, grouped by a state’s rate-cap regime, because per-capita figures compare states fairly while raw counts mostly reflect population size. Widely circulated state-by-state store counts that trace only to commercial lending or debt-relief websites are excluded. Some underlying datasets are several years old; they remain the standing non-commercial reference for store density and are dated. Every quantitative claim carries a numbered citation.

Density by Regime: The Clearest Signal

Group states by how high they let payday rates go, and lender density lines up almost perfectly.

The gradient is steep. States in the highest-cap group, which includes Alabama, Louisiana, Kentucky, and Missouri, carry a median of 14.9 stores per 100,000 residents.¹ States with the lowest caps that still allow the product, such as Colorado, Oregon, and Maine, sit at 3.0, roughly a fifth of that density.¹ And in the 15 states plus the District of Columbia that prohibit payday lending or hold it to 36% APR, Pew found no payday stores at all.¹

The Federal Reserve’s county-level study supports the same reading. Modeling lender counts per million residents against demographics and state rules, it found per-capita density highest in a cluster of southern states, naming Alabama, Mississippi, and Tennessee, and tied that density to both permissive state law and local population characteristics.³

Raw Counts vs Per Capita: Two Different Maps

The state with the most stores and the state with the most stores per person are rarely the same place.

By raw number, the largest states lead simply because they have the most people. California accounts for about 10% of all payday storefronts in the country and slightly more than that share of the national total, with Los Angeles County alone hosting hundreds of stores.⁴ That is a population story, not a policy one.

Per capita, the picture shifts to smaller, higher-cap states. The density leaders are concentrated in the South and a few high-cap plains states, the same places the Federal Reserve and Pew both flag.^1,3 A large state can have many stores and still be middling per resident; a small high-cap state can have few stores in absolute terms and still rank at the top per person. For a question about where payday lending is most concentrated in people’s lives, the per-capita map is the right one.

Why this report uses per capita. Several widely shared “most payday lenders by state” lists give raw store counts sourced only to commercial lending sites. Those counts mostly rank states by population. The per-capita density from Pew and the Federal Reserve, built on regulatory and Census data, is both better sourced and more meaningful for measuring concentration.^1,3

The Zero End: Where Lenders Vanish

The fewest-lenders question has a clean answer: a 36% cap takes the count to zero.

Pew identified 15 states plus the District of Columbia where there are no payday lending stores, because each prohibits the product or caps interest at or below 36%, a level at which the two-week model cannot operate.¹ That group includes Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia, with more states having joined the 36% group since.¹

Among states that do permit payday lending, the fewest stores per resident are in the lowest-cap group, led by Colorado at the bottom of the density table.¹ Colorado is also the cleanest natural experiment. After it lowered allowable rates, half of all payday stores closed, yet each remaining store served about 80% more customers and residents’ access to credit was virtually unchanged.⁶ Fewer storefronts did not mean a credit desert; it meant consolidation.

Why Lenders Locate Where They Do

Beyond the rate cap, the Federal Reserve found a consistent set of local drivers.

The Fed’s location model found payday-store density per capita rises with the share of the population that is non-Hispanic Black, with lower educational attainment, and with weaker local creditworthiness, and falls where banks are denser.³ The Milken Institute Review documented the same inverse relationship directly: across California counties, more bank branches per capita went with fewer payday stores per capita, and payday lenders concentrated in lower-income, more heavily Latino and Black communities.⁵

That is why “most lenders” and “fewest lenders” are not random. Lenders cluster where two conditions meet: state law permits high-cost lending, and a sizable share of residents lack access to mainstream banking. Remove either condition, through a rate cap or through denser bank presence, and store density drops.^3,5

The Market Is Shrinking, and Moving Online

The storefront count that defines “most vs fewest” is falling everywhere, for two reasons.

First, regulation. As more states adopt 36% caps, storefronts in those states close; the CFPB projected its payday rule would reduce storefront volume substantially.⁷ Second, the channel shift. California’s regulator illustrates both: the state licensed about 2,445 payday storefronts at the 2005 peak, but by 2024 the licensed-lender count had fallen sharply while online loans grew to roughly 53% of all payday loans in the state.²

So the storefront map is becoming a smaller part of the whole. The states that still have the most physical lenders are the high-cap states that have not driven the product out, but even there the count is trending down as borrowing migrates to the web. A ranking of physical storefronts captures a shrinking slice of payday lending overall.²

The Pattern in One View

Most lenders, fewest lenders, and none: the spread maps cleanly onto state policy.

The answer to “which states have the most and fewest payday lenders” is, at bottom, a map of state interest-rate policy. The most-dense states are those that allow the highest rates; the least-dense permitting states are those with the tightest caps; and the states with none are those that set the cap low enough to close the product down. Population determines the raw count, but policy determines the density, and density is what tells you where payday lending actually lives.

Sources

Report generated June 2026. Figures are sourced as cited and dated; confirm current data before acting on it. Store density is reported per 100,000 residents and grouped by rate-cap regime because per-capita figures compare states fairly. Raw state-by-state storefront counts circulated by commercial lending sites are deliberately excluded as unsourced to a primary, non-commercial origin. The number of states prohibiting payday lending has grown since the underlying Pew dataset; the “15 states plus DC” figure reflects that dataset and is dated accordingly.