Compare legal limits, fees and the true cost of small loans in your state before you talk to any lender. Compare legal limits, fees and the true cost of small loans in your state.
Minnesota Loan Rules
High-cost payday lending is prohibited in Minnesota under the Minnesota Small Loan Statute, which is enforced by MN Dept of Commerce to protect residents from triple-digit interest charges. State law establishes a strict rate cap of 36% APR. Because a typical payday loan nationally charges about $15 per $100 for two weeks—or roughly 391% APR—short-term deferred presentment lenders cannot legally charge payday rates in Minnesota. Any online payday loan offer advertising triple-digit rates exceeds Minnesota legal limits, and a borrower must be at least 18 years old to sign a loan contract, as shown in the payday table below.
Borrowers in Minnesota who need a small loan still have regulated, legal options that comply with state law. Licensed lenders can offer fixed-payment installment loans under the Minnesota Regulated Loan Act / Financial Corporations Act, where the maximum all-in APR is 51% for a $500 six-month loan, 33% for a $2,000 two-year loan, and 24% for a $10,000 five-year loan, as detailed in the installment table below. Federal credit unions also offer Payday Alternative Loans (PALs) ranging from $200 to $2,000 for 1 to 12 months, with a maximum 28% APR and an application fee up to $20 for members. Use the tables and links below to review every rule enforced by MN Dept of Commerce and compare licensed lenders and credit unions in Minnesota.
Payday loan rules in Minnesota
| Legal status | Prohibited — rate cap 36% APR |
|---|---|
| Governing law | Minnesota Small Loan Statute |
| Fee or rate cap | Capped at 36% APR (2023 Law) |
| State regulator | MN Dept of Commerce |
| Minimum borrowing age | 18 |
Installment loan rules and APR caps in Minnesota
| Governing law | Minnesota Regulated Loan Act / Financial Corporations Act (Minn. Stat. § 56.001 et seq.; Minn. Stat. § 47.59) |
|---|---|
| Required license | Regulated Loan License |
| Max all-in APR ($500 / 6 months) | 51% |
| Max all-in APR ($2,000 / 24 months) | 33% |
| Max all-in APR ($10,000 / 60 months) | 24% |
| Origination fee limit | $25 administrative fee on small loans under Minn. Stat. § 47.59 subdiv. 6(d) |
| Credit insurance rules | Allowed |
| State regulator | Minnesota Department of Commerce |
Before you borrow in Minnesota
- Verify the lender's license in Minnesota. Confirm that the lender holds an active state license with MN Dept of Commerce before sharing your bank account details or signing an agreement. You can also look up the company on NMLS Consumer Access (nmlsconsumeraccess.org), though not every state uses NMLS for every license type.
- Check the Truth in Lending disclosure box. Under the federal Truth in Lending Act and Regulation Z, every lender must give you a written disclosure showing the APR, finance charge, amount financed, and total of payments before you sign the contract.
- Compare the all-in APR and origination fee to state caps. Make sure the contract's all-in APR and any origination fee stay within the Minnesota limits shown in the tables above, such as 51% on a $500 six-month installment loan under the Minnesota Regulated Loan Act / Financial Corporations Act. Covered active-duty servicemembers and their dependents are protected by the federal Military Lending Act, which caps covered credit at 36% Military APR.
- Review your right to cancel and payment stop protections. Check the payday table above to see how rescission (your right to cancel a loan shortly after signing) works in Minnesota. If you set up recurring electronic bank debits, federal Regulation E lets you stop preauthorized withdrawals by notifying your bank at least 3 business days before the scheduled debit, though this does not cancel the debt.
- Check credit union Payday Alternative Loans (PALs). Before taking a higher-cost non-bank loan, see if you qualify for membership at a credit union in Minnesota. Under NCUA rules, federal credit union PALs offer $200 to $2,000 for 1 to 12 months with a maximum 28% APR and an application fee of up to $20.
How online and tribal lenders fit Minnesota law
Online lenders making consumer loans to residents of Minnesota generally must be licensed by MN Dept of Commerce and obey the rate caps set by the Minnesota Small Loan Statute and the Minnesota Regulated Loan Act / Financial Corporations Act, regardless of where the lender is located. You can check whether a website is operated by a licensed lender by contacting MN Dept of Commerce in Minnesota or searching NMLS Consumer Access (nmlsconsumeraccess.org), though not every state uses NMLS for every license type. Some online lenders claim tribal sovereign immunity and argue that Minnesota usury caps and licensing laws do not apply to their loans. Federal appeals courts have reached different results on tribal immunity in online lending: several decisions (2nd Circuit in 2014 and 2019, 4th Circuit in 2021, and 7th Circuit in 2021) supported states and the CFPB, while one decision (4th Circuit in 2019) found a lender protected by immunity.
Small-dollar lending in Minnesota by the numbers
- Residents
- 5,714,162
- Median household income
- $92,264
- Loan company offices
- 32
- Loan companies
- 3
- Bank branches
- 1,582
- Banks
- 278
- Credit unions
- 81
- Pawn shops
- 86
Sources for Minnesota counts: Financial provider totals come from our state directories, compiled using FDIC data for banks and bank branches, NCUA data for credit unions, company websites and public map listings for loan companies and offices, and Overture Maps data for pawn shops. Resident population and median household income figures come from the U.S. Census Bureau.
Detailed Minnesota loan guides and local directories
Where to file a lending complaint in Minnesota
If a lender operating in Minnesota charges more than the statutory cap, lends without a required state license, ignores your right to cancel, or uses unlawful collection tactics, save copies of your loan contract, Truth in Lending disclosures, and payment records. You can submit a formal complaint to MN Dept of Commerce in Minnesota and to the federal Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov. Be aware that no lender or debt collector can have you arrested or jailed for an unpaid consumer debt.
Loan rules FAQ: Minnesota
Are payday loans legal in Minnesota?
No, high-cost payday loans are prohibited in Minnesota under the Minnesota Small Loan Statute, which is enforced by MN Dept of Commerce across the state. State law sets a rate cap of 36% APR, making triple-digit deferred presentment loans unlawful to offer to Minnesota residents.
What is the maximum APR on an installment loan in Minnesota?
Under the Minnesota Regulated Loan Act / Financial Corporations Act, the maximum all-in APR on an installment loan in Minnesota depends on the loan amount and repayment period. State rules set the limit at 51% for a $500 six-month loan, 33% for a $2,000 two-year loan, and 24% for a $10,000 five-year loan. Check the installment table above for specific rules on origination fees and credit insurance enforced by MN Dept of Commerce in Minnesota.
What is the minimum age to take out a small loan in Minnesota?
You must be at least 18 years old to enter into a valid small-dollar loan contract in Minnesota. This minimum borrowing age applies to both storefront locations and online lenders serving Minnesota residents. Lenders will ask for government-issued identification to verify your age before issuing Truth in Lending disclosures.
Who regulates small-dollar lenders in Minnesota?
Non-bank payday and installment lenders in Minnesota are licensed and supervised by MN Dept of Commerce under state law. Borrowers can verify a lender's license status by contacting MN Dept of Commerce directly or by searching NMLS Consumer Access at nmlsconsumeraccess.org, though not every state uses NMLS for every license type. At the federal level, the Consumer Financial Protection Bureau (CFPB) also oversees federal lending disclosures and collection practices.
What should I do if a lender in Minnesota charges more than the law allows?
If a lender charges fees or an APR above the legal limits in the Minnesota Small Loan Statute or the Minnesota Regulated Loan Act / Financial Corporations Act, gather your loan agreement, Truth in Lending disclosure box, and bank statements. Report the violation to MN Dept of Commerce in Minnesota and file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov. Remember that you cannot be arrested or jailed for an unpaid consumer debt.
How do I stop a lender from taking automatic payments from my bank account?
Under federal Regulation E, you have the right to stop preauthorized recurring electronic debits by telling your bank or credit union at least 3 business days before the scheduled transfer date. Your bank may ask for written confirmation within 14 days of an oral request, and you should also notify the lender in writing that you are revoking authorization. Stopping automatic bank debits prevents further withdrawals, but it does not cancel the debt.
Small-dollar loan rules in neighboring states
How we get our numbers: We review the Minnesota Small Loan Statute, the Minnesota Regulated Loan Act / Financial Corporations Act, and published rules from MN Dept of Commerce in Minnesota to summarize statutory loan limits and licensing rules. For installment loans, we use the maximum all-in APR—including interest, origination fees, and permitted administrative charges—for three standard benchmarks ($500 for 6 months, $2,000 for 24 months, and $10,000 for 60 months), based on state statutes and the state-by-state surveys of the National Consumer Law Center (NCLC). Your CU Partner is an independent educational website, not a lender or loan broker, and does not provide legal advice. Because laws and regulatory interpretations change, please confirm current rules with MN Dept of Commerce before borrowing.
Sources: Consumer Financial Protection Bureau (CFPB); National Credit Union Administration (NCUA); NMLS Consumer Access; Electronic Code of Federal Regulations — Regulation Z (12 CFR Part 1026); U.S. Census Bureau; National Consumer Law Center (NCLC).