Payday Loans are Legal in Minnesota

Beware of predatory lending

Payday Lenders in Minnesota

Payday loans in Minnesota provide immediate assistance for those who are facing unplanned expenses or an emergency. According to the Minnesota Department of Commerce, there are over 350,000 payday loans issued in the state each year, with an average loan size of $380. These loans are popular with people who do not have access to traditional credit or loan options and are designed to be repaid the following pay period. Payday loans can be risky for borrowers due to the high interest rates and fees. They may damage their credit scores if not paid back on time.

Payday lenders in Minnesota are required to adhere to the state’s regulations and license requirements. Some lenders use predatory tactics, such as charging excessive fees and failing to disclose the full terms of the loan. However, reputable lenders will prioritize the protection of their borrowers and ensure fairness and transparency throughout the entire process. Before taking out a Minnesota payday loan, it is important that borrowers carefully weigh the risks and potential consequences. They should also work with lenders who are reputable and prioritize their interests.

Payday Loan Laws

Minnesota has laws in place that regulate payday loans and attempt to protect borrowers from predatory lending practices. According to Minnesota law, payday lenders must be licensed and must follow rules, including a cap on the amount of the loan and the fees that can be charged. Additionally, lenders must disclose all of the terms of the loan, including the APR and fees. Borrowers in Minnesota also have the right to rescind a payday loan within a certain period of time.

Minnesota has two major codes that regulate the payday loan industry:

Loan Terms and Conditions

Maximum loan amount: $250

Maximum Interest Rate: 391%

Minimum loan term: No minimum

Maximum loan term: 30 days

Number of rollovers allowed: No rollovers allowed

Finance Charge: 6%-15% depending on amount borrowed

Legal action: 6 Years

Certified Payday Lenders in Minnesota

Company Name	Company score	License Status
Big Picture Loans, LLC	7.3	Valid
Populus Financial Group, Inc.	7.1	Valid
LDF Holdings, LLC	6.8	Valid
Payday America Inc.	6.1	Valid
MoneyLion Inc.	5.9	Valid
COMMUNITY CHOICE FINANCIAL, INC.	5.1	Valid

History of Minnesota Payday Loans

The history of payday loans in Minnesota has been shaped by legal changes and challenges. In 1939, the Small Loan Act was passed, allowing licensed lending and loans up to $300 with less than 3% monthly interest. In 1995, payday lending became legal in Minnesota with the passing of Stat. § 47.60 et seq., capping the loan amount at $350. However, from 1999 to 2012, payday lenders could bypass restrictions by applying for an industrial loan and thrift company license, leading to a $12 million collection of fees. Despite attempts to limit the number of loans, no new regulations are expected in the near future. Payday lending remains a controversial issue in Minnesota, with concerns over high fees and interest rates being a primary concern for consumer advocates. The state has made efforts to regulate the industry and protect borrowers from predatory lending practices.

State Resources

How to file a complaint

The Minnesota Department of Commerce has an online form that can be submitted for borrowers looking to file a complaint against their lender. There are a series of questions that will help them to take the first steps in investigating the complaint. Supporting documents can be submitted in a variety of forms, to include JPEG files.

Minnesota Payday Loans Debt Relief

How to Get out of Payday Loan Debt?

Some steps can help you get out of a payday loan debt cycle if you find yourself stuck. One option is to attempt to negotiate a plan of payment with your lender. This will allow you to pay your debt off gradually while avoiding any legal repercussions. There are also a number of nonprofit organizations that are available and offer programs dealing with financial aid and counseling. Credit counseling agencies can assist you in creating a debt management plan. You can also explore options to consolidate your payday loans with other debts. This may result in lower interest rates or simpler terms of repayment. It is important to seek help as quickly as possible in order to avoid further debt.

Support Resources

Types of Quick Loans in Minnesota

Lines of Credit A line of credit is a type of loan that allows borrowers to access funds on an as-needed basis. These type of loans are a good option for those who do not know how much they are going to need, since they only withdraw funds as required. Borrowers can obtain a line of credit through a licensed lender, and they must be provided with clear terms, including the interest rate and any fees. Lines of credit can be a useful tool for managing unexpected expenses or emergencies, but borrowers should be aware of the potential risks and costs involved. It's important to shop around for the best rates and terms and to only borrow what can be repaid in a timely manner.

Installment Loans Installment loans offer borrowers access to lump sums of money that must be repaid back in installments over time. In Minnesota, installment loans tend to offer longer payment terms and lower interest rates than payday loans, making them a more affordable solution when larger sums of money are needed. They may be secured or unsecured loans, with some lenders offering flexible repayment options such as early repayment without penalty and flexible payment dates or amounts; it's important to review the terms and fees of installment loans carefully to understand what can be repaid on time.

Cash Advance Apps Cash advance apps, which allow users to access small loans quickly and conveniently, are available in Minnesota. However, these apps are subject to state regulations, which limit the amount that can be borrowed to $350. Additionally, these apps must comply with the state's lending laws, which require clear disclosures of fees and interest rates. While cash advance apps can be a useful resource for managing short-term financial needs, borrowers should be cautious about the potential risks and costs involved. It's important to only borrow what can be repaid on time and to carefully review the terms and conditions of any cash advance app before using it.

Alternatives to Payday Loans in Minnesota

Personal Loans

Personal loans in Minnesota are a popular financial option for those who need to borrow money for any number of reasons. These loans can be used for anything from paying off credit card debt to financing a home renovation project. A big advantage that comes with personal loans is that they commonly have lower interest rates than credit cards, something that can help borrowers save money in the long run. In Minnesota, there are many lenders who offer personal loans with varying terms and interest rates. It is important for borrowers to do their research and compare different lenders to find the best loan for their needs.

Land Loans

Land loans in Minnesota are available for individuals who are interested in purchasing land for hunting, general recreation, weekend getaways, a place of escape, or a place to retire. Land loans are useful for future home builders who want to buy land without constructing a house immediately. Raw land loans are for completely undeveloped areas, while unimproved land has some utilities and amenities but lacks basic utilities like electricity and natural gas. Improved land loans have access to roads, electricity, and water, making them more expensive to purchase but have lower down payments and interest rates than raw or unimproved land loans. Land loans typically require a larger down payment and have higher interest rates than traditional home loans due to the absence of property collateral, which makes it a riskier transaction for lenders.

Farm Loans

Bridge loans are commonly used in Minnesota by sellers who are buying a new home but have a current mortgage. Bridge loans are a way to pay off the first mortgage. Costs can vary considerably between lenders, and bridge loans may require monthly payments or upfront and end-term lump sum payment charges. While bridge loans offer homeowners the opportunity to buy a new home before selling their current one and provide additional funds during a time-sensitive transition, they also come with higher interest rates.

Bad Credit Loans in Minnesota

Bad credit loans in Minnesota are designed for borrowers with poor credit scores or no credit history. They come with higher interest rates and fees than might be seen with traditional loans, and may potentially require collateral or a co-signer. In Minnesota, bad credit loans can be secured or unsecured and are issued by banks, credit unions, and online lenders.

Minnesota Small Business Loans

Minnesota provides several types of small business loans with different requirements and terms:

SBA loans: Loans that are backed by the U.S. Small Business Administration, which offer lower interest rates and longer repayment terms than conventional loans.
Minnesota Department of Employment and Economic Development (DEED) loans: DEED offers a variety of loan programs for small businesses, including the Minnesota Emerging Entrepreneur Program (MEEP) and the Small Business Development Loan Program (SBDLP).
Equipment financing: Equipment financing allows businesses to purchase equipment and pay for it over time. Many lenders offer equipment financing with flexible terms.
Invoice financing: A type of financing that gives businesses an opportunity to receive cash advances on unpaid invoices. The invoices serve as collateral.
Microloans: Small loans provided by nonprofit organizations or community lenders to help small businesses get started or expand.

VA loans in Minnesota

VA loans are available to eligible veterans and active-duty service members who want to purchase or refinance a home. These loans are guaranteed by the VA and offer competitive interest rates and flexible repayment terms. VA loans in Minnesota do not require a down payment or private mortgage insurance, making them an attractive option for eligible borrowers. To qualify for a VA loan, borrowers must meet military service requirements and obtain a Certificate of Eligibility from the VA.

Minnesota Student Loans

Many options are available to Minnesota students to help finance their college education. These options include:

Federal Student Loans: Loans provided by the federal government offering low-interest rates and flexible repayment plans.
Minnesota SELF Loan: The SELF Loan is a low-interest student loan available to Minnesota residents attending eligible colleges or universities within the state or attending select out-of-state schools.
Minnesota Academic Excellence Scholarship (AES): The AES is a merit-based scholarship that is available to Minnesota residents who have a strong academic record and plan to attend an eligible Minnesota college or university. The scholarship award amount varies based on financial need and the cost of attendance.
Private Student Loans: Loans from private lenders, they commonly have higher interest rates and may require a co-signer.

Minnesota Income Information

According to the 2021 U.S. Census, Minnesota had a median household income of $77,706, slightly higher than the national median of $69,021.Minnesota has a diverse economy with significant contributions from industries such as agriculture, manufacturing, healthcare, and technology. The state has a highly skilled workforce and a reputation for innovation, making it a desirable location for businesses and workers The poverty percentage in Minnesota in 2021 was 9.3%. Median household income and poverty levels vary significantly by county in Minnesota, with Carver County having the highest median income at $104,011, 60% above the national average and Mahnomen County having the lowest at $45,398.

United States Census Bureau. “Poverty in the United States: 2021.” Accessed on April 26, 2023.
United States Census Bureau. U.S. Census Bureau QuickFacts: Minnesota . Accessed on April 26, 2023.

Minnesota Payday Lender Complaints

Below are trends associated with the top payday lenders in Minnesota, as reported to the Consumer Financial Protection Bureau.

Company Name	Count
Big Picture Loans, LLC	12
Populus Financial Group, Inc. (F/K/A Ace Cash Express)	7
LDF Holdings, LLC	4
Payday America Inc.	3
MoneyLion Inc.	2
COMMUNITY CHOICE FINANCIAL, INC.	2
Total Complaints	54

Consumer Financial Protection Bureau. Consumer Complaint Database. Accessed on April 26, 2023.

Most Common Issues

Complaint type	Count
Charged unexpected interest or fees	19
Struggling to pay loan	10
Problem with payoff process	7
Received a loan didn’t apply for	7
Can’t stop withdrawals from bank	3

What are the main reasons residents of Minnesota apply for payday cash advance online or offline

Payday loans are typically used for nonnegotiable everyday expenses like your rent, utilities, and groceries. Per data reported by Pewtrust, the percentage of reasons described below

Reason	Share
Regular Expenses (Utilities, car payment)	53%
Unexpected emergency/expense	16%
Rent/Mortgage	10%
Something Special	8%
Other	5%
Did not answer	2%

Payday Lenders by City

Minneapolis
St. Paul
Rochester
Bloomington
Duluth
Brooklyn Park
Plymouth
Woodbury
Maple Grove
Lakeville

Blaine
St. Cloud
Eagan
Eden Prairie
Burnsville
Coon Rapids
Apple Valley
Minnetonka
Edina
St. Louis Park

Moorhead
Mankato
Shakopee
Maplewood
Cottage Grove
Richfield
Roseville
Inver Grove Heights
Brooklyn Center
Andover

Frequently Asked Questions

Will applying for a payday loan impact my credit?

Payday loans are typically not reported to the three major credit reporting agencies, and most lenders do not conduct credit checks as part of their application process.

What do I need to apply for a payday loan?

To apply for a payday loan in Minnesota, you will typically need to provide your identification, proof of income, bank account information, and contact information.

Can I cancel my payday loan?

In Minnesota, borrowers can cancel their payday loan by returning the borrowed amount to the lender by the end of the next business day after receiving the loan, as part of the “right to rescind” provision in Minnesota’s payday loan laws.

Can a payday loan lender garnish my wages?

In Minnesota, a creditor cannot garnish your wages or bank account without first obtaining a court judgment against you, which requires them to sue you in court. Even then, they generally cannot garnish more than 25 percent of your disposable income.

Can spouses have separate loans?

Yes, spouses can have separate payday loans in Minnesota as long as they individually meet the lender’s eligibility requirements and can provide the necessary documentation and information to apply.

When will I receive my funds if I am approved for a payday loan?

Funds are typically received on the same day or the next business day after loan approval, and can be disbursed through various methods, such as direct deposit or a prepaid debit card.

What happens if I can’t repay my payday loan on time?

You may face additional fees and charges, and the lender may take legal action or send the debt to a collection agency, but it’s important to communicate with the lender and explore all available options.

When could I apply for another payday loan?

In Minnesota, you can apply for a new payday loan immediately after you pay the current one off.