Personal Loans in Alaska: What Licensed Lenders May Charge

How the Alaska rate bands work

AS 06.20.230 sets the ceiling as a monthly rate on the unpaid principal balance, in bands. Each band of the balance carries its own maximum, so the blended rate falls as the loan grows. Interest is computed by the actuarial method, which means you pay interest only on the balance still owed.

The same bands apply to open-end loans, such as a line of credit from a licensee. Because the monthly rates apply to the balance that remains, the blend moves as you pay down the loan: early on, a $2,000 loan has most of its balance in the 2% band; near the end, more of what is left sits in the 3% band.

Who needs a license and who does not

AS 06.20.010 bars anyone from making loans of $25,000 or less at a rate above what an unlicensed lender could charge without first getting a license from the Department of Commerce, Community, and Economic Development. Its Division of Banking and Securities licenses small loan companies, examines them and investigates complaints. The division says out-of-state lenders with no office in Alaska must also comply with the Act.

• Banks and credit unions answer to their own charters and banking regulators instead, and a bank may charge the rates its home state allows.
• Online lenders that partner with a bank may make loans through that bank, which can put the loan outside the Alaska bands. Ask who the lender of record is.
• Payday loans follow separate Alaska rules. Our sister site Lendmira covers them on its Alaska lending laws page.

How Alaska compares with other Western states

On the National Consumer Law Center's comparison of a $2,000 two-year loan from a licensed non-bank lender, Washington caps the loan at about 29% APR, Alaska and Hawaii at about 31%, and Oregon at 36%. For a $10,000 five-year loan, Alaska's 25% sits close to Hawaii's 24% and Washington's 27%. The state rules map shows every state side by side.

What to check on an Alaska offer

The cap is in monthly terms, but your offer will show an annual percentage rate. Federal law requires every lender to give you a Truth in Lending disclosure before you sign, with the amount financed, the finance charge, the APR and the total of payments.

• Compare the APR with the bands. On a loan of $10,000 or less, an APR above about 36% is a reason to ask how the lender is licensed.
• Ask about any fee taken from the loan. A fee deducted from the amount you receive raises the APR; net loan proceeds shows how to check what reaches your account.
• Ask who the lender of record is if you apply online, so you know whose rules apply.

Check a lender and file a complaint

1. 1 Look up the license on the Division of Banking and Securities' active small loan licensee list, or in NMLS Consumer Access, before you apply.
2. 2 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
3. 3 File a complaint with the division using its general complaint form, or call (907) 269-8140 in Anchorage, (907) 465-2521 in Juneau or toll free (888) 925-2521.
4. 4 Send a complaint to the CFPB as well if the lender is a bank or a bank partner, or if you are unsure who regulates it.

Questions people ask