Payday Loans and Cash Advance in Minnesota

Capped at 50% APR since January 2024. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Minnesota.

Is a Cash Advance Legal in Minnesota?

Payday loans are legal in Minnesota, but since January 1, 2024 they have been priced by an annual percentage rate cap instead of a fee schedule. Minnesota Statutes 47.60 governs consumer small loans, the state's name for a single-payment payday loan of $350 or less due within 30 days. Before 2024 the statute listed dollar fees by loan size; Minnesota Laws 2023, chapter 57, article 3, replaced that schedule with a rule that the lender may charge an annual percentage rate of up to 50 percent and nothing else. Any loan priced above 36 percent must also pass an ability-to-repay test under section 47.603, which requires the lender to document your income, obligations and living expenses and conclude that you can make the payment and still cover your bills for 30 days afterward. The same thresholds apply under section 47.601 to consumer short-term loans of up to $1,300. On $300 for two weeks the most a licensed lender can charge is $5.75. Lenders, including online lenders without a Minnesota office, must file with the Department of Commerce, and a borrower may hold only one consumer small loan at a time.

The governing law is Minnesota Statutes 47.60 (consumer small loans), 47.601 (consumer short-term loans) and 47.603 (ability to repay), as amended by Minnesota Laws 2023, chapter 57, article 3 (Minn. Stat. 47.60, subd. 1 to 3; 47.601, subd. 1 and 2; 47.603).

Loan Limits and Terms in Minnesota

The 2023 rewrite did two things at once. It capped the price at a 50 percent annual percentage rate, which the statute defines to include all interest, finance charges and fees, and it tied anything above 36 percent to an underwriting duty. Under 47.603 a lender charging more than 36 percent must collect documented evidence of your net income, major financial obligations and basic living expenses, work out a debt-to-income ratio for the loan period, and reasonably determine that you can make the payment and still meet your obligations for 30 days after it. A lender can skip that paperwork only by pricing the loan at 36 percent or less. After the due date the rate on any unpaid balance may not exceed 2.75 percent a month, and a returned-check charge under section 604.113 is the only add-on allowed.

What a $300 Loan Costs in Minnesota

Minn. Stat. 47.60, subd. 2(a) allows an annual percentage rate of up to 50 percent and no other charge, so the fee is the interest on $300 for 14 days at that rate: 300 x 0.50 x 14 / 365 = $5.75. The borrower repays $305.75. Checking the APR: 5.75 / 300 x 365 / 14 = 0.50, or 50 percent. Because this loan is priced above 36 percent, the lender must first complete the ability-to-repay analysis in 47.603. Over the 30-day maximum term the same loan would cost $12.33. Before January 1, 2024 the old fee schedule allowed $5 plus 6 percent, at least $17.50, on a loan of this size.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Minnesota

• A consumer small loan lender may charge an annual percentage rate of no more than 50 percent, computed to include all interest, finance charges and fees, and no other charge or payment is permitted (Minn. Stat. 47.60, subd. 1 and 2(a)).
• A payday loan priced above 36 percent APR may be made only after the lender documents your net income, major obligations and living expenses and reasonably determines that you can repay it and still cover those expenses for 30 days afterward (Minn. Stat. 47.603).
• The loan may not exceed $350 or 30 days, you may not have more than one consumer small loan outstanding, and the lender may not split a loan or repay one loan with the proceeds of another (Minn. Stat. 47.60, subd. 1 and 2).
• Before making consumer small loans to Minnesota residents a business must file with the Commissioner of Commerce, pay $250 per place of business and show $50,000 in liquid assets; the filing requirement expressly covers internet lenders with no Minnesota location (Minn. Stat. 47.60, subd. 3).
• A consumer short-term loan contract may not choose another state's law, move disputes to a forum outside Minnesota, or limit class actions over unlicensed lending or charges above the cap; any such clause is void (Minn. Stat. 47.601, subd. 2).
• The written contract must show the annual percentage rate in bold 24-point type, itemize every fee and interest charge, and name the lender with a street address and phone number (Minn. Stat. 47.601, subd. 2).
• A lender collecting a consumer short-term loan may not use the debt collection practices prohibited by section 332.37, and lenders must file annual reports showing repeat-borrowing counts (Minn. Stat. 47.601, subd. 3 and 4).

Complaints and licence checks go to the Minnesota Department of Commerce, Financial Institutions Division: 651-539-1600, mn.gov/commerce, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in Minnesota

Minnesota closed the online loophole in the statute itself. Section 47.60, subd. 3 says the term business entity includes one that does not have a physical location in Minnesota that makes a consumer small loan electronically via the Internet, so a website lending to Minnesota residents must file with the Department of Commerce, meet the same asset test and follow the 50 percent cap and the ability-to-repay rule. Section 47.601 adds that a consumer short-term lender includes anyone with substantial involvement in facilitating, marketing, lead-generating, underwriting, servicing or collecting these loans. Contract clauses that apply another state's law, send disputes out of state or waive class actions are void under 47.601, subd. 2. Out-of-state and tribal-affiliated websites still advertise payday loans to Minnesotans at rates far above 50 percent; those loans are made outside the statute. The Department's complaint line, 651-539-1600, can tell you whether a lender has filed with the state before you give it your bank details.

Alternatives If a Payday Loan Is Not the Right Fit

The consumer small loan itself is now one of the cheapest regulated short-term products in the country, at 50 percent APR, or 36 percent when the lender skips underwriting, so a licensed Minnesota lender is a reasonable place to start for a few hundred dollars over a few weeks. Minnesota also licenses regulated lenders under chapter 56, which section 47.60 refers to, and those lenders make longer installment loans priced under their own chapter. Minnesota banks and credit unions, which are exempt from the 47.60 filing, offer small personal loans and overdraft lines, and federal credit unions can offer Payday Alternative Loans under National Credit Union Administration rules. For a single bill, ask the utility, landlord or clinic for a written payment plan; county human services offices and the statewide 2-1-1 line can connect you with emergency help for rent, energy and food. If an online lender charged you more than 50 percent, keep the contract and file a complaint with the Department of Commerce before paying more.

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

Frequently Asked Questions

Nearby States

• North DakotaThe fee cap, a worked example and the regulator to call in North Dakota.
• South DakotaThe fee cap, a worked example and the regulator to call in South Dakota.
• IowaThe fee cap, a worked example and the regulator to call in Iowa.
• WisconsinThe fee cap, a worked example and the regulator to call in Wisconsin.