Personal Loans in Minnesota: What Licensed Lenders May Charge

How the Minnesota rate limit works

Section 47.59 sets the price ceiling for consumer loans made by banks, savings institutions and regulated lenders licensed under chapter 56. Section 56.131 sends licensed lenders to these same rates. For a closed-end loan, subdivision 3 lets the lender charge whichever is greater of two options.

The $1,425 break point is the figure printed in the statute. Subdivision 3 ties the dollar amounts to a federal price index: they can change on July 1 of even-numbered years, and the commissioner must announce any change by April 30. On a closed-end loan with an original principal of $8,208 or less, the lender may also charge a one-time administrative fee of up to $25. The APR on your Truth in Lending disclosure includes that fee, so it can sit slightly above the contract rate.

Small and short-term loans have an all-in limit

Two smaller loan types follow separate sections. A consumer small loan under section 47.60 has a cash advance of $350 or less. A consumer short-term loan under section 47.601 has a principal of $1,300 or less, or demands a large share of the balance within 60 days. For both, the lender may charge up to 50% APR, and section 47.60 counts all interest, finance charges and fees in that APR.

• Above 36% APR, the lender must first run an ability-to-repay analysis under section 47.603, based on documented income, major obligations and basic living expenses.
• No other charges may be collected on a consumer small loan beyond those the section allows.
• Anti-evasion rules added in 2023 treat a person who holds the predominant economic interest, risk or reward in a short-term loan as the lender, even if it calls itself an agent or service provider.

Payday loans in Minnesota fall under these small-loan sections. Our sister site Lendmira covers them on its Minnesota lending laws page.

Who needs a license and who does not

Finance companies that make consumer installment loans in Minnesota are licensed as regulated lenders under chapter 56 by the Department of Commerce. Consumer small loan lenders must be a financial institution under section 47.59 or a business registered with the commissioner.

• Banks and credit unions answer to their own charters and banking regulators. A bank may charge the rates its home state allows, so an out-of-state bank can lend above Minnesota's ceilings.
• Online lenders that partner with a bank may make loans through it. For small and short-term loans, the 2023 predominant-interest rule can still make the online company the lender. Ask who the lender of record is.

Paying early, late fees and insurance

Section 47.59 lets you prepay a consumer loan at any time without penalty. A late charge is allowed only on a payment not made by the tenth day after its due date, and it may not exceed 5% of the payment or the dollar amount in the statute ($9.88 as printed), whichever is greater. See late fees and returned payments for how those charges show up in an agreement.

Subdivision 10 of section 47.59 covers credit insurance: it provides for a refund of an unearned separate insurance charge when the loan is paid off in the cases it lists, excuses refunds under $5, and bars a policy that covers more than two of the borrowers on one loan.

Check a lender and file a complaint

1. 1 Look up the license with the Department of Commerce's license lookup, by the company's name, before you apply.
2. 2 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
3. 3 Complain to the Department of Commerce online, under its other complaint types, or at its complaints line, 651-539-1600 (800-657-3602 from Greater Minnesota). It licenses regulated loan companies and payday lenders.
4. 4 Send a complaint to the CFPB as well if the lender is a bank or a bank partner, or if you are unsure who regulates it.

Nearby, Iowa, North Dakota and South Dakota cap a $2,000 two-year loan at about 36% APR on the National Consumer Law Center's comparison, while Wisconsin has no numeric cap. The state rules map shows every state, and how to verify a lender lists the checks to run.

Questions people ask