Payday loan laws can be tricky, but knowing the costs can help you make a better choice.
Payday loans can be a quick way to get cash during a financial setback, but the laws surrounding them can be tricky. Here’s what you need to know before applying.
How much can I borrow in Minnesota?
Minnesota Statutes 47.60 et seq. governs payday loans in Minnesota, which requires all payday lenders to be registered and abide by the maximum fee guideline detailed below.
Here are the quick facts about payday loans:
- Maximum loan: $350
- Maximum loan term: 30 days
- APR: A 14-day $100 loan has an APR of 390%
- Collection fees: A lender may charge a $30 NSF (non-sufficient funds) fee
The amount you’ll be charged in interest varies depending on the amount of your loan.
- $50 or less: $5.50
- $50.01 to $100: 10% + $5 administrative fee
- $100.01 to $250: 7% (minimum of $10) + $5 administrative fee
- $250.01 to $350: 6% (minimum of $17.50) + $5 administrative fee
- Default: 2.75% per month on the remaining loan amount
Compare short-term loan options in Minnesota
What you need to qualify for a loan
All payday lenders will require you to be at least 18 years old, be an American citizen or resident and have a regular monthly income of at least $1,000.
When you begin your application, be prepared to supply your Social Security number,
What should I consider before taking out a loan?
Although payday loans can be a great way to get ahead when you’re having financial troubles, there are other ways you can get help with your bills or get financing without taking on this high-cost form of debt.
Minnesota has an Energy Assistance Program, a Food Support Program and a Medical Assistance program that can help with large bills and everyday expenses. In addition, you can consider other forms of non-credit funding, such as requesting a pay advance from your employer or ask a friend or family member for help.
If you have a credit card, you can take out an advance on your remaining line of credit. You may also want to consider another type of short-term loan, like an installment loan, so that you have longer to pay back what you owe.
When you’re in a rough spot financially, you might be considering a payday loan. These can be suitable for making it between paychecks, but they are costly. Be sure to consider how much the total will cost and the other options you have before applying.