With the present economy, many need financing and loans, but payday loans prove to be a big help at first and a burden later for most. One cannot deny that payday loans in Minnesota being legal, is a big help but banks and lenders definitely need regulations. The North Star State is probably one of the states that have strict laws on payday loans, which is aimed towards protecting consumers.
Payday Loan Amount, Rate and Fees in MN
Payday loans in Minnesota are legal. However, the Land of 10,000 Lakes is among the states with the lowest maximum loan amount. Borrowers can apply for a maximum of $350 to be paid in 30 days.
For people who are looking for a lower loan amount with shorter payment period, Minnesota allows $100 loan that is payable in 14 days. The finance rate is $15.
Borrowers are also protected with laws limiting the maximum finance rates. For instance, finance rate is only $5.50 for loans up to $50. The maximum rate for $51 to $100 loan is 10 percent of the principal and additional $5. For loans $101 to $250, the minimum rate is $10 while the maximum is 7% of the principal loan amount plus $5. Loan amount of $251 to $350 has minimum finance rate of $17.50 and a maximum rate of 6% plus $5. The state allows banks and lenders to charge additional 2.75% every month for loans on default.
Laws on Payday Loans Lack a Few Details
While Minnesota has been very specific with the maximum loan amount and finance rates, it lacked details on the maximum outstanding loans that a person can have. It did indicate that rollovers are not allowed. In fact, Minnesota has laws that prohibit payday lenders from automatically extending the loans after the 30th day if it is less than $350. Lenders cannot withdraw just the interest and extend the loan for additional days. Moreover, another loan cannot be used to pay a payday loan.The laws also indicate that the NSF or collection fees are only $30. Plus, threatening consumers that they will be jailed or their paycheck will be garnished are illegal.
Monitoring and Regulating the Payday Lending Industry
The Minnesota Department of Commerce is the one that regulates monitoring and regulating of the payday lending industry. It takes care of providing information as well as processing complaints.
Moreover, the Office of the Attorney General has also been active when it comes to payday lending. In 2012, Delaware-based Sure Advance was instructed by the Minnesota Attorney General to stop operating in the said state. In addition, it paid $760,000 consumer restitution fund for unlawfully charging borrowers 1,564 APR. The restitution fund was then divided to more than 1200 Minnesotan who were victimized by Sure Advance.
Payday loans in Minnesota are useful when you need money (up to $350). It helps especially if you did not bother to build an emergency fund. Fortunately, every Minnesotan is protected by the laws on payday loans especially against shady tactics in the lending industry.