Payday Lending in Minnesota

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NEW! Payday Loan Debt Trap Drains Millions of Dollars from Financially-Strapped Minnesotans, Minnesotans for Fair Lending, March 2013. Press ReleaseDetailed Report.

Number of Loans: There were more payday loans made in Minnesota in 2012 than during any year since statutorily authorized payday lending began in the state. The number has actually doubled since 2007, to 381,000. This is troubling because 76% of payday loan volume is due to payday lenders churning borrowers every two weeks – the growing number of loans actually reflects a growing number of consumers stuck in the debt trap.

How much money are we talking about? According to Minnesota Department of Commerce data, the average loan in 2012 was $380. Assuming a 273% APR (what Payday America charges for that size loan) on 10 two-week loans (the average number of loans a Minnesotan borrower takes out per year), the total amount paid back on a $380 loan would be $777.90 (principal and interest). That is money drained away from a family’s ability to pay monthly bills.

Cumulatively, payday lenders drain over $9 million annually from Minnesotans in excessive fees[1], in cities and towns all across the state. See Payday lending storefronts in Minnesota by city (PDF – information gathered from the Minnesota Department of Commerce).

Who makes the loans? The largest payday lenders in Minnesota are Payday America and Ace Cash Express.

If Minnesota’s Consumer Small Loan Act allows short-term loans up to $350 and fees and interest equaling no more than about $26, why do we have APRs at 273% and loans available up to $1,000? Since 2005, some lenders began to use what is called the Industrial Loan and Thrift  (ILT) loophole in the law. The loophole makes it possible for a payday lender to be licensed as an ILT and charge different fees. Loophole loans have far exceeded the number of loans made under the payday lending law. According to Minnesota Department of Commerce data, in 2012, loophole (ILT) lenders made 75% (285,125) of payday loans in Minnesota; while 25% (95,923) were made by lenders operating under the Payday Lending Law.[2] To effectively address the debt trap and predatory lending practices, we should close the loophole and require all payday lenders to play by the same rules.

For more information, download our fact sheet, Myths and Fact about Payday Lending in Minnesota or see the Joint Religious Legislative Coalition (JRLC)’s Issue Paper on Payday Lending


[1] Center for Responsible Lending, The State of Lending in America and its Impact on U.S. Households, (2013). Page 24.

[2] Minn. Stat. § 47.60.

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