Payday Loans and Cash Advance in Michigan

Legal, up to $600 for 31 days. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Michigan.

Is a Cash Advance Legal in Michigan?

Payday loans are legal in Michigan under the Deferred Presentment Service Transactions Act, Public Act 244 of 2005, which is enforced by the Department of Insurance and Financial Services (DIFS). A licensed provider may advance up to $600 on a check or debit authorization it holds for no more than 31 days. The fee is set on a sliding scale: 15 percent of the first $100, 14 percent of the second, 13 percent of the third, 12 percent of the fourth and 11 percent of the fifth and sixth, plus a small database verification fee that DIFS sets each year. You may have two transactions open at once, but only one with any single lender, and the statewide database enforces that before the money changes hands. The law bans renewing an agreement for a fee, gives you until the close of the next business day to cancel for a full refund, and, once you have taken eight loans in 12 months, lets you demand a repayment plan of three installments on your next three paydays for a $15 fee. A $300 loan for two weeks costs $42 at the maximum, about 365 percent APR, so the protections limit the damage rather than the price.

The governing law is Michigan Deferred Presentment Service Transactions Act, Public Act 244 of 2005 (MCL 487.2121 to 487.2173; limits at 487.2153, repayment plan at 487.2155, rescission at 487.2157).

Loan Limits and Terms in Michigan

The sliding fee scale means the cost per $100 falls as the loan grows: $15 on a $100 loan, $42 on $300 and $76 on the full $600. Whatever the amount, the fee is charged once for a term of up to 31 days, and the agreement must state the cost as an annual percentage rate. DIFS adjusts the database verification fee each year and licensees may add that amount to the service fee. Because you can hold two loans from two different lenders, the practical cap is $1,200 outstanding, and both loans show in the database. Michigan has no statutory cooling-off period between loans, but the ban on renewals means each new loan must be a fresh transaction rather than an extension of the old one.

What a $300 Loan Costs in Michigan

MCL 487.2153 allows 15 percent of the first $100, 14 percent of the second and 13 percent of the third, so on $300 the maximum service fee is 15 + 14 + 13 = $42 and the payoff is $342, before the small database verification fee DIFS sets each year. APR = 42 / 300 x 365 / 14 = 3.65, or 365 percent. On a 31-day term the same $42 fee works out to about 165 percent. The required agreement must show the equivalent annual rate in writing.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Michigan

• Every provider must be licensed by DIFS and must check the statewide database before each transaction, which blocks a customer who already has an open transaction with that lender or more than one with any other lender (MCL 487.2153, 487.2154).
• The agreement must itemize fees, state the cost as an annual percentage rate and print a notice that you can cancel for a full refund by returning the money before the office closes the next business day (MCL 487.2152, 487.2157).
• A licensee may not renew a deferred presentment agreement for a fee; an extension is allowed only at no charge and may not increase what you owe (MCL 487.2155).
• After eight transactions with any licensee in a 12-month period, you can request a repayment plan within 30 days of the due date: three equal installments on your next three paydays, for a fee that started at $15 (MCL 487.2155).
• If you pay the full amount by the maturity date, the licensee may not charge you anything for accepting partial payments along the way, and you can redeem your check early at any time (MCL 487.2157).
• A licensee that violates the Act owes the customer restitution, ranging from $15 up to five times the fee charged, on top of any actual damages, and the customer keeps the right to sue (MCL 487.2156).

Complaints and licence checks go to the Michigan Department of Insurance and Financial Services (DIFS): 877-999-6442, www.michigan.gov/difs, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in Michigan

Michigan law reaches any deferred presentment transaction with a Michigan customer, so an online lender needs the same DIFS license and must run the same database check as a storefront. DIFS and the Michigan Attorney General both tell residents to confirm a license on the DIFS site or by calling 877-999-6442 before borrowing, and the same lookup covers Internet lenders. Unlicensed websites are the ones that offer more than $600, skip the database check, or renew the loan for a fee, all of which are illegal in Michigan. Out-of-state and tribal lenders that are not licensed here cannot lawfully collect the fees the Act does not allow, and a Michigan court will apply the Act to a loan made to a Michigan resident. The safest test is simple: if the lender does not tell you the transaction number assigned by the database provider, which the written agreement must include, it is not operating under Michigan license. Complaints about any lender, licensed or not, go to DIFS.

Alternatives If a Payday Loan Is Not the Right Fit

For borrowers who need small amounts, Michigan regulated lenders licensed under the Regulatory Loan Act make installment loans over longer terms at far lower annual rates than payday products, and federal credit unions offer Payday Alternative Loans, a small-dollar product with a capped rate and a small application fee for members. Many Michigan credit unions also run their own emergency loan programs. Outside of loans, an employer wage advance, an overdraft line at your bank, a payment plan with the utility or medical provider you owe, and local emergency assistance through the Department of Health and Human Services can cover a one-time gap without a two-week deadline. If you already hold a payday loan you cannot repay, ask for the no-fee extension first, and if you have had eight loans in the past year, invoke the statutory repayment plan under MCL 487.2155, which spreads the balance over three paydays for a flat fee instead of a new loan.

Compare the installment loan and payday alternative loan options before you decide.

Cities We Cover in Michigan

• Grand Rapids, MILocal cost of living, ordinances and help lines
• Holland, MILocal cost of living, ordinances and help lines

Frequently Asked Questions

Nearby States

• OhioThe fee cap, a worked example and the regulator to call in Ohio.
• IndianaThe fee cap, a worked example and the regulator to call in Indiana.
• WisconsinThe fee cap, a worked example and the regulator to call in Wisconsin.