Michigan Payday Loans Laws
This article is all about certain limitations with regard to payday lending in Michigan. All lenders must comply with the following regulations:
- Maximum loan amount is $600;
- Borrowers cannot have more than two outstanding loans from different lenders;
- The first $100 loan is charged 15%, the second $100 is granted 14%, the third $100 is charged at 13% and the fourth $100 is charged at 12%;
- Some lenders charge 45 cents as verification fee;
- APR for a 2-week loan cannot exceed 390%.
Michigan cash advances can be given for a period not exceeding 31 days. In the event that a borrower fails to pay in time, he may request an installment payback plan. Moreover, lenders are allowed to charge a $25 funds fee in case of defaulted payment.
The borrower has a legal obligation to repay the loan and may be subject to permitted collection actions from the lender. If a lender considers a lender is operating against the law, he may issue a letter of notification.
The lender has 3 days to agree to or deny these claims. If the lender admits the violation, he pays the borrower five times the fee attached to the loan.
How Michigan Installments Work
- Payday loans are governed by the Deferred Service Transactions Act;
- Borrowers sign a written agreement showing and fees and APR;
- The agreement must clearly explain the loan terms and conditions.
Debt and Collection Limits
The loan is expected to be repaid on time since no rollovers are allowed. A lender can only extend a loan if it does not charge a fee.
A lender can charge a one-time collection fee of $25 for a returned check. However, a lender is prohibited from taking criminal action against a borrower for failing to pay.