Payday Loans
A payday loan is usually a short-term, high-cost loan, generally for $500 or less, that it due on your next payday. New state laws have made significant changes to payday loans (small, short-term loans). Key updates include:
- Loan fees and charges: A new cap limits loan finance charges and fees to a maximum 50% APR (annual percentage rate) – which now includes all interest and fees.)
- Repayment ability: Lenders must now analyze the borrower’s ability to repay loans with APRs between 37% to 50%.
- Loan limits: The minimum loan amount for short-term loans increased from $1,000 to $1,300.
- New requirements: Lenders must follow these new rules when issuing payday loans.
Debt Collection
All debt collectors in Minnesota must provide a written list of Minnesota-based nonprofit credit counseling organizations. These organizations are licensed by Commerce to help Minnesotans understand their rights and responsibilities, manage debt, and work with debtors and creditors to settle outstanding debts.
Resources for Managing Debt
There are resources available to help you manage your debt.
Advice for Consumers
- Consider alternatives to avoid payday or short-term loans. If you are having trouble paying bills, contact the business billing you and request an extension or negotiate repayment. Investigate options such as credit cards or loans from a local bank or credit union, which may have lower interest rates.
- Check the license status of a business operating in Minnesota. Before using an online lender, verify they have a license in Minnesota. Lenders not licensed by the Minnesota Department of Commerce do not follow the same guidelines.
- Get credit counseling. Commerce’s website list has nonprofit credit counseling services available for little to no cost to you.