Internet payday loan lenders in Minnesota must be licensed

Oct 29

Internet payday loan lenders in Minnesota must be licensed

Q: Are Internet payday loans legal in Minnesota? I have three payday loans, and am struggling to pay. I am told that non licensed payday lenders are illegal, can not make loans here, and all I have to pay back is the principal.

A: Yes, every Internet payday loan shop in Minnesota must be licensed. So if they are, then they are perfectly legal, that is. Effective August 1, 2009, all Internet payday lenders must be licensed and comply with Minnesota Statutes. I think initially, the payday lenders making loans to Minnesota residents via the Internet must have met the licensing requirements starting December 1, 2008, but according to Minnesota State Government Online site, the date was August 1, 2009. There are many important points that can empower you and other consumers. Licensing is required regardless of whether the lender has a physical presence in Minnesota. Payday lenders are also required to comply with the limits on loan amounts, fees and charges, and other requirements of state law. I put some essential numbers, so read on.

These are only few things Internet payday lenders should comply with to stay legal in Minnesota,
1. The maximum loan amount is $350.
2. You must be given Truth-in-Lending disclosures, meeting all state requirements.
3. Internet payday lender must prominently display interest rates, fees and all other charges as well as explain how those are computed.
4. The term of a payday loan shall be for no more than 30 calendar days.

Here are key fees and interest rates that are charged on payday loans by Internet lenders in your state,
– on any amount up to and including $50, a charge of $5.50 may be added
– on amounts in excess of $50, but not more than $100, a charge may be added equal to 10% of the loan proceeds plus a $5 administrative fee
– on amounts in excess of $100, but not more than $250, a charge may be added equal to 7% of the loan proceeds with a minimum of $10 plus a $5 administrative fee
– for amounts in excess of $250 and up to the allowable maximum of $350, a charge may be added equal to 6% of the loan proceeds with a minimum of $17.50 plus a $5 administrative fee

Now, Minnesota imposes penalty for intentional violations. Any lender, Internet or brick and mortar payday loan store intentionally violating the rules, is liable to the consumer in an amount not to exceed $100 for each violation. Unless the lender violates other laws in which case harsher fines apply.

If a payday lender does not have a license while giving payday loans, the loan is void and the debtor is not obligated to pay any amounts owing. So it sounds like, you do not have to repay even principal. The debtor may recover all amounts paid from the lender, if the last scheduled payment on the loan was made within a year.

Finally, here is the updated list of Minnesota licensed payday loan lenders. But you should stay from them.

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