Michigan Payday Loan Laws

Michigan payday loans are regulated by the Deferred Presentment Service Transactions Act. These laws are very strict and are carefully monitored. All payday loan facilities in Michigan must be licensed.

• A maximum percentage rate of 15% is charged for the first $100
• The percentages drop in 1% increments per loan amount bracket
• The maximum term that a loan can be is 31 days
• Only one loan is permitted at a time
• A loan cannot exceed $600
• The minimum loan term is 14 days
• Rollovers are permitted and are not limited

In Michigan, a database is in place to ensure that a borrower does not have an open loan with another facility prior to any loan amount being discussed. For borrowers that pay their loans in full, and on time, the fees do not change. Michigan did not used to put a cap on how many times a borrower can rollover, or extend their loan by another two weeks. When the borrower needed to extend their loan, they had to pay another $15 fee.

Michigan payday loan facilities are not covered under Michigan Usury Laws. The Michigan Usury laws prohibit charging finance charges or interest more than 7%. The criminal percentage rate of 25% on loans under the Usury law does not apply to payday loan companies either.

Michigan consumers are not well protected under these laws. While legislature is trying to impose more strict laws, the fact of the matter is, if you get yourself into a mess, it is your own doing. There are still companies that are handing out fraudulent loans. That is everywhere. A company cannot loan you more than you are capable of paying back. Your information must be checked in the database to ensure that you do not have an outstanding loan somewhere else. That really is the only protection that Michigan payday loan borrowers have.

Additionally, borrowers can file a complaint with the state of Michigan if they feel that they have been wronged or taken advantage of by the payday loan system. If a transaction is not handled as the company policy, and state laws imply, the lender can face disciplinary action and fines. New legislature is on the table in 2006 passed to forbid rollovers. This helped to protect borrowers from becoming more in debt.

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