Payday Lending in Minnesota

Number of Loans: In 2020, 177,733 payday loans were taken by 26,938 borrowers throughout Minnesota, according to the Minnesota department of Commerce. This equates to 7 loans per borrower on average. In order to receive a payday loan, borrowers must have a job, however. With unemployment skyrocketing over 400% from May 2019, at 2.7%, to May 2020, at 11.1%, these high payday loan numbers give rise to deep concern, as the rate of payday loans taken were far from a reflection of the Minnesota unemployment rate’s fluctuation. The grip of predatory lenders has only strengthened in the face of pandemic-induced economic hardship.

There is reason to have hope, though. In 2012 the number of payday loans taken in the state reached 381,000. In the past 8 years of advocacy, the number of payday loans has been cut in half. As Minnesotans advocate within their communities, we see these numbers decreasing. There is still much work to be done, though, for the thousands of consumers being brought and kept in the debt trap each year.

How much money are we talking about? The Minnesota Department of Commerce reports that the average payday loan taken in 2020 was $417. With the reported average interest rate on these loans hitting 208%, which is 12.7 times higher than the average 2020 credit card interest rate according to Business Insider, Minnesota lost almost $5,000,000 in interest and fees attributed to these loans. These are dollars that would have otherwise gone to various areas of commerce throughout the state, benefiting Minnesota businesses and communities, rather than the pockets of predatory lenders in disguise as lifelines for those who struggle to make ends meet.

Who provides the loans? The largest payday lenders in Minnesota are Payday America and Ace Cash Express, though there are other smaller lenders throughout the state.

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. 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.


[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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