Payday Loans | Minnesota Laws
By Space Coast Daily // May 19, 2020
Minnesota payday loan laws are in favor of borrowers. Payday loan lenders should always follow state laws at all times.
Payday loans
Most people from Minnesota always find themselves with financial issues and always look for a short-term fix. Those with cash problems might try to secure payday loans. These are high-interest, short-term loan meant for borrowers who need money before their next paycheck. The agreement mostly needs borrowers to pay back the borrowed cash in 14 days when their salary comes.
People need to be aware of the fees and costs that come with such loans. They need to be aware of their lenders some of them so not adhere to Minnesota laws and charge higher fees than those required by the authorities.
Note that despite most lenders claiming that the payday loans are a “one-time-only” loans that will help borrowers survive until their next salary, some borrowers who take these loans always find themselves in more debt since they begin taking more loans, one after another. This means more accrued interest that exceeds the borrowed amount.
Online payday loans are mostly problematic
Tough finances can make individuals go online to find payday loans. You should always be alert of online payday lenders who don’t follow the consumer protection and interest rate regulations. The lenders operate online without the required state licensure.
Most payday loan sites such as Expert Payday Loans operate online. You will basically type in your personal information such as bank account numbers and social security.
Once your loan is approved, money will be deposited to your bank account within minutes. There are huge fines if you don’t pay the loan in time. The charges are mostly debited from the borrower’s bank account after the agreed repayment time. The interests can accrue and exceed the borrowed cash.
There are payday online lenders that try to evade state consumer protection and interest laws by trying to get licenses in states that don’t have tough restrictions.
They operate without a state license or they can operate under Indian tribal authority or outside USA and claim that their loans follow the laws of home tribe or country.
However, in Minnesota, the laws are very clear. Payday loan lenders that operate in Minnesota should follow the Minnesota laws. This also applies to lenders located in other states.
Always do a proper research before signing up to any payday loan website and ensure that the site is registered with the Minnesota Department of Commerce. Some borrowers face legal issues when they cannot agree on the money stated on the loan contract.
Another issue that arise is communication problems between the lender and the borrower. Some lenders tend to be hard to be reached.
Avoid sharing information on the internet to online firms that are not reputable. You risk exposing yourself to identity and privacy theft risks. An online company that is not reputable can obtain your personal information and empty your account.
High costs and fees
Despite payday loans promise quick money which is appealing to borrowers, always ensure that you are aware of the costs that come with such loans before taking them.
Minnesota laws cap the fees and interest rates that lenders can charge on payday loans. For loans amounting to $350 and below, rates in Minnesota are capped on a reducing rate as follows :
Amount of loan fee $50 or below $5.50 $50.01 to $100 10% and an extra $5 charge $100.01 to $250 7 % (not less than $10) and an extra $5 charge $250.01 to $350 6% (not less than $17.50 and an additional $5 charge
For amounts that range from $350.01-$1000, lenders cannot charge more than 33% annual interest and an extra $25 charge. If you’re from Minnesota, you need to avoid loans that fail to meet these caps.
Payday loan providers should be licensed with the state
There is a statute that protects payday loan borrowers in Minnesota. According to the law, all lenders including those who operate online should comply with the regulations which include rate caps and licensure provisions.
You should always confirm with the Minnesota Department of Commerce before you sign up for any loan. They are located at 85 7th Place East, Suite 280 St. Paul, MN 55101 and can be reached via (651) 539-1500 (local) (800) 657-3602 (Greater MN only).
Consider all the available options
Borrowers need to consider all the available options before signing up for a payday loan. Always ask yourself if you need the cash urgently.
If it’s possible to wait until your salary arrives, you don’t need to take the loan. If you need to pay an urgent bill, you can always negotiate with the company you owe money and see if you can reach an agreement on the time to settle the bill instead of taking a loan. You can also research on other financial firms to know if they offer better deals.
The office of the attorney general can be contacted if you need to file complaints or if you need more information.
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