Bemidji City Council Hears Presentation on Payday Loan Consolidation Laws

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BEMIDJI – Bemidji City Council met for a working session on Monday, during which members learned about the state of Minnesota’s payday loan consolidation

The presentation was given by the Minnesotans for Fair Lending organization. According to the presentation, Minnesota law allows a typical two-week payday loan consolidation of $ 380 to cost up to $ 40, with an annual percentage rate of up to 275%.

In addition, large lending companies can operate under different licenses than small lenders, thus escaping regulations. As part of their presentation, MLF representatives argued that state regulation should be more stringent to protect consumers from high tariffs.

An example of these regulations was an ordinance approved in Moorhead, Minnesota. The ordinance does not allow more than two short-term loans of $ 1,000 or less per calendar year.

The order also does the following:

  • Allows minimum repayment within 60 days of loan issuance.
  • For loans between $ 350 and $ 1,000, lenders are not allowed to charge more than 33% annual interest.
  • Lenders are prohibited from charging additional fees for an extension or increasing the balance owed above the original amount.
  • There cannot be more than four short-term consumer loan companies in the city.

After the presentation, Ward 1 Council member Audrey Thayer expressed interest in a similar ordinance for Bemidji.

Ward 3 Council member Ron Johnson and Mayor Jorge Prince said a better option would be to advocate for a change in state law in the Minnesota Legislature. . Johnson said the matter could be referred to lobby groups such as the Coalition of Greater Minnesota Cities and the League of Minnesota Cities for consideration in a legislative session.

At the regional level, three neighboring states have passed payday loan laws:

  • In North Dakota, the legislature has set a maximum loan amount of $ 500 and a loan term of 60 days.
  • In South Dakota, an election measure passed an interest rate cap at 36%.
  • A voting measure in Nebraska capped annual percentage rates for payday loans at 36%.


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