Borrowing in Iowa: What State Law Allows

Payday loans are legal, within tight dollar limits

In Iowa a payday loan is called a delayed deposit service. You write a check (or authorize a debit), the business gives you cash, and it agrees to wait before depositing the check. The businesses are licensed by the Iowa Division of Banking under Iowa Code chapter 533D, which sets these limits:

• A lender may hold no more than two checks from you at one time.
• Those checks may total no more than $500 in face value.
• A check can be held for no more than 31 days.
• The fee is capped at $15 on the first $100 of the check and $10 on each additional $100.
• The lender may not pay off one payday loan with the proceeds of another from the same lender.
• A late penalty of up to $15 may be charged only once per check.

Those caps still add up. A $500 check can carry $55 in fees, so you'd walk out with $445. If the check is held for two weeks, that's an APR of roughly 320%. The lender must show you the fee and the APR before you sign.

Car title loans are held to 21%

Iowa Code section 537.2403 limits a consumer loan secured by your car's title to a finance charge of 21% a year, unless the lender is licensed under a law that authorizes a different rate. The same section bans dressing a title loan up as a sale, lease, pawn or rent-to-own deal to get around the cap. The triple-digit title loans sold in some states aren't legal here.

If a lender offers you cash for your title at a fee that looks like 25% a month, walk away and report it to the Division of Banking.

A 36% ceiling for licensed lenders since July 2026

Most consumer finance companies that make personal installment loans in Iowa hold a regulated loan license under Iowa Code chapter 536. House File 2329, signed on May 2, 2026, replaced the tiered rates the superintendent of banking used to set with a single ceiling of 3% a month, or 36% a year, for all regulated loans. It took effect July 1, 2026.

Before the change, the rates were tiered by balance. Under the rule the superintendent adopted in 2020, the limit was 36% a year on the first $3,000, 24% on the part from $3,000 to $8,400 and 18% on the part from $8,400 to $30,000. The new law drops the tiers, so the whole balance can now be charged up to 36%.

In practice, a larger loan from a licensed finance company can now cost more than it could before. The 36% figure is a ceiling, not the going rate: a borrower with good credit should see offers well below it. Compare at least three, and read how to compare loan offers before you choose.

How long a creditor can sue, and what it can take

Under Iowa Code section 614.1, a creditor has 10 years to sue on a written contract and five years on an unwritten one. Credit card debt is less clear. Iowa's statute doesn't name it, and many card accounts are opened without a signed agreement, so collectors often face the five-year limit. A creditor holding a signed contract may argue for 10. Read how the time limit works before you pay on an old debt or admit you owe it.

Iowa adds a yearly cap on top of the federal wage garnishment limit. Each judgment creditor can take only a set amount from your wages per calendar year, based on what you're expected to earn:

The federal limit still applies on every paycheck: no more than 25% of disposable earnings, or the amount above 30 times the federal minimum wage, whichever is less. Child support and some other orders follow different rules.

Checking a lender and filing a complaint

1. 1 Check the license on NMLS Consumer Access or the Division of Banking's license verification page. A payday lender needs a delayed deposit license; an installment lender needs a regulated loan license.
2. 2 Get the numbers in writing: the amount you'll receive, every fee in dollars, the APR and the due date.
3. 3 Try the business first if something goes wrong, then file with the Division of Banking online. It usually gives the company 10 to 20 business days to respond.
4. 4 Report scams to the Iowa Attorney General's Consumer Protection Division and see how to spot loan scams.

Common questions