Personal Loans in Vermont: What Licensed Lenders May Charge

How the Vermont rate limit works

Vermont does not set a separate small-loan rate. The general interest statute, 9 V.S.A. § 41a, sets the limits, and the licensing law tells licensed lenders they may not charge more. For an installment loan that no other part of the section covers, the lender has two ways to stay within the law and may use the one that gives the higher result.

On a large loan the 18% option is the higher one, so 18% is the practical ceiling for most personal loans above a few thousand dollars. On a small loan the 24% tier can give a higher blended rate. The APR on your Truth in Lending disclosure is the figure to hold against these limits, since it counts interest and most fees together.

How Vermont compares with its neighbors

On the same comparison of a $2,000 two-year loan, Massachusetts allows about 24% APR, New York about 25% and New Hampshire about 36%. If you live near a state line, your state of residence and the lender's license decide which rules apply, not where the lender is based. The state rules map shows every state side by side.

Who needs a license and who does not

Under 8 V.S.A. § 2201, a person may not make loans and charge interest or fees in Vermont without a license from the Commissioner of Financial Regulation. Section 2233 adds that loans solicited or made by mail, phone or electronic means to Vermont residents fall under the chapter wherever the lender is. Such a lender must be licensed, though it does not need an office in Vermont.

• Loans above the limit: a licensee may not charge more than 9 V.S.A. § 41a allows, and a loan that breaks the limit cannot be enforced in Vermont.
• Loan solicitation: a company that helps a Vermont borrower get a loan for pay or gain, including lead generation, also needs a license under the same chapter.
• Banks and credit unions that fall within the depository institution exemption are supervised by 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 Vermont limit. Ask who the lender of record is before you sign.

Payday and auto title loans are a separate subject. Our sister site Lendmira covers them on its Vermont lending laws page.

Check a lender and file a complaint

1. 1 Look up the license on the DFR's verify a license page or in NMLS Consumer Access, by the company's name, before you apply.
2. 2 Compare the APR on the disclosure with the limits above. If a nonbank offer is well above 18% on a large loan, ask the lender which law it lends under.
3. 3 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
4. 4 Complain to the DFR through its complaint page or by phone at 802-828-3301 (toll free 833-337-4685). The Banking Division line is 802-828-3307.
5. 5 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.

If a lender asks for a fee before it will approve or fund the loan, treat it as a warning sign; how to verify a lender explains what to check.

Questions people ask