Payday Loans are Legal in Michigan

Beware of predatory lending

Payday Lenders in Michigan

Payday loans are a fast solution for sudden financial emergencies in Michigan. These loans are often used to cover unexpected expenses or bridge the gap between paychecks. To qualify for a payday loan, Michigan residents must meet certain criteria surrounding income and residency.

Michigan is one of the most populated states in the US with an estimated 10 million residents. According to the Center for Responsible Lending, payday lending in Michigan generates more than $90 million in fees each year; over 400,000 payday loans were issued with an average loan amount of $369 and an annual interest rate of 369% in a single year. Even though interest rates often reach the triple digits, many residents of Michigan still turn to payday lenders when they need immediate financial assistance.

Payday loans are convenient to get in Michigan, with over 500 stores state-wide, but they also come with considerable financial risks. Fees and high-interest rates can add up quickly, making it difficult to repay the loan on time. Due to this, it is important that borrowers carefully evaluate their options and understand the terms of their loan before making a commitment.

Payday Loan Laws

The state of Michigan allows payday loans, but there are safeguards in place for the consumer, primarily through the Deferred Presentment Service Transaction Act. The state requires that all payday loans be tracked to ensure that borrowers do not have more than one loan at any given time and they also require that lenders provide a written contract to sign that includes all of the terms and fees associated with the loan.

The State of Michigan has several pieces of legislation that govern payday loans:

MCLS § 487.2121: Outlines the loan amount, the terms allowed, and the tiered finance charge system.
MCLS § 487.2153: Limits borrowers to one payday loan at any given time
MCLS § 487.2155: Prohibits rollovers on payday loans and requires the option for a repayment plan
MCLS § 487.2158: Sets limits and standards for collection fees allowed on unpaid payday loans

Loan Terms and Conditions

Maximum loan amount: $600

Maximum Interest Rate: 407%

Minimum loan term: No minimum defined in legislation

Maximum loan term: 31 days

Number of rollovers allowed: None

Finance Charge: 15%-11% decreasing for every $100 loan

Legal action: 6 Years

Certified Payday Lenders in Michigan

Company Name	Company score	License Status
Big Picture Loans, LLC	7.6	Valid
LDF Holdings, LLC	7.1	Valid
Advance America, Cash Advance Centers, Inc.	6.8	Valid
Tribal Lending Enterprise, Inc	6.1	Valid
MoneyLion Inc.	5.8	Valid
ENOVA International, INC	5.1	Valid

History of Michigan Payday Loans

Michigan first attempted to regulate payday lending in 2005, limiting the amount that borrowers could take out to $600 and capping interest rates at 15% of the amount borrowed. However, these regulations were largely ineffective, as lenders found loopholes and continued to charge high-interest rates and fees. Since then, the laws and regulations surrounding payday lending in Michigan have remained largely unchanged, with three proposed bills failing to pass in 2017.

State Resources

How to file a complaint

Borrowers can file a complaint with the Department of Insurance and Financial Services using their website. There is an online form to fill out, but there are options to mail, email and fax as well, and they will work to resolve the complaints and help answer any questions the borrower may have. They ask that consumers attempt to resolve the issue directly with the lender before filing a complaint. They also offer an online call service to help borrowers understand their options.

Michigan Payday Loans Debt Relief

How to Get out of Payday Loan Debt?

There are many options available to manage the repayment of a payday loan in the state of Michigan. Contacting the lender to discuss the situation should always be the first step. Borrowers may be able to negotiate a repayment schedule that reduces the amount owed, extends the payment period and lowers the interest rate. Another option that can help consumers manage their payments better is to refinance the loan at a lower rate using other lending options like a personal loan. As a final resort, bankruptcy may allow borrowers to discharge their loan. This should only be considered after consulting with an attorney.

Support Resources

Types of Quick Loans in Michigan

Cash Advance Apps Cash advance apps have become increasingly popular in Michigan, offering borrowers a quick and convenient way to access short-term funds. These apps allow users to borrow money against their upcoming paycheck, with the amount and fees typically based on the borrower's income and credit history. While cash advance apps can be a helpful financial tool in emergencies, they often come with high interest rates and fees that can trap borrowers in cycles of debt. Furthermore, some cash advance apps have been criticized for their lack of transparency and potentially predatory lending practices.

Installment Loans Installment loans offer borrowers a flexible and convenient way to access funds for a variety of needs, including home repairs, car expenses, and unexpected medical bills. These loans are repaid over time in regular installments, often with a fixed interest rate and set repayment schedule. Installment loans can be a beneficial option for some borrowers, they often come with high interest rates and fees that can make them expensive in the long run. Additionally, borrowers should be wary of predatory lenders that may offer installment loans with excessively high interest rates or hidden fees.

Lines of Credit A line of credit is a flexible form of financing that lets borrowers take out money as needed, up to whatever limit they were approved for. Because the borrower doesn't have to take out the full amount right away, they only end up paying interest on the amount withdrawn. This can make a line of credit a useful financial tool for unexpected expenses or other short-term financing needs. It is important to remember that lines of credit can also come with high interest rates and fees, and borrowers need to carefully review the terms and conditions before signing. It is important to use a line of credit responsibly and to have a plan in place for timely repayment.

Alternatives to Payday Loans in Michigan

Personal Loans

Personal loans can be used to finance a variety of expenses at the discretion of the borrower. Personal loans are available from online lenders, banks and credit unions. Interest rates and fees vary depending on who is lending the money, but they are usually lower than those of credit cards or payday advances. If you need to borrow a large sum upfront, and want a set repayment schedule, personal loans are a great option.

Construction Loans

Construction loans are a popular financing option for major home renovations or new building projects in Michigan. These short-term, lump-sum loans commonly require a down payment of at least 20% of the total loan being applied for. That number is typically based on an appraised property value. While construction loans can be a helpful tool for financing large-scale projects, borrowers should carefully plan ahead and ensure they have the necessary funds for timely repayments. Additionally, it is important to work with a reputable lender and carefully review any construction loan's terms and conditions before borrowing. With proper planning and careful consideration, construction loans can help Michigan residents achieve their home renovation or building goals.

Home Equity Loans

Home equity loans in Michigan provide borrowers with both a flexible and convenient way to access funds at lower interest rates. With the ability to borrow against the equity they've built in their homes, homeowners can access significant amounts of financing for home improvements, debt consolidation, or other major expenses. Borrowers need to keep in mind that failure to repay the loan on time could lead to foreclosure, so they have to carefully consider the risks before deciding if it is the right choice.

Bad Credit Loans in Michigan

Bad credit loans are designed to help people with poor credit scores access funds when needed. Since the risk the lender is taking is higher than most personal loans, they tend to have higher interest rates and fees. However, they can be a viable option for those who need cash quickly and cannot obtain traditional loans.

Michigan Small Business Loans

Small business loan options in Michigan:

SBA loans: The SBA offers several loan programs for small businesses, including 7(a) loans, microloans, and disaster loans.
Michigan Economic Development Corporation (MEDC) Loans: The MEDC offers a range of financing programs, including loans, grants, and tax incentives, to help businesses grow and thrive in Michigan.
Credit union loans: Credit unions offer a range of financing options for small businesses, including term loans, lines of credit, and equipment financing.
Minority Business Development Agency (MBDA) Loans: The MBDA offers loans and other financing options to minority-owned businesses in Michigan and throughout the country.
Community Development Financial Institutions (CDFIs): CDFIs are nonprofit lenders that offer loans and other financial services to underserved communities and small businesses.

VA loans in Michigan

VA loans are offered to eligible veterans, active-duty service members, and their spouses to help purchase a home. They are unique to other mortgage loans because they are backed by the Department of Veterans Affairs (VA), meaning that lenders are protected against loss if the borrower defaults. VA loans usually offer more favorable terms than traditional mortgages, including lower interest rates, no down payment requirements, and no private mortgage insurance (PMI) requirements. To qualify for a VA loan in Michigan, borrowers must meet eligibility requirements, including minimum credit score and service requirements. VA loans are a great option for eligible veterans and service members who want to become homeowners.

Michigan Student Loans

Many options are available to Michigan students to help finance their college education. These options include:

Federal Student Loans: The U.S. Department of Education offers several federal student loan programs, including Direct Subsidized and Unsubsidized Loans, Parent PLUS Loans, and Graduate PLUS Loans.
Michigan Alternative Student Loan (MI-LOAN): The MI-LOAN program is a low-interest loan program for Michigan residents attending participating Michigan colleges or universities.
Michigan National Guard Tuition Assistance Program: The Michigan National Guard Tuition Assistance Program provides tuition assistance to eligible National Guard members attending participating Michigan colleges or universities.
Michigan Competitive Scholarship: The Michigan Competitive Scholarship is a need-based award for undergraduate students attending participating Michigan colleges or universities.
Private Student Loans: Private lenders, such as banks and online lenders, offer student loans with varying interest rates and repayment terms.

Michigan Income Information

The recently released 2021 U.S. Census reports show Michigan having a median household income of $63,202, somewhat lower than the national median of $69,021. Michigan has a diverse economy, with a strong manufacturing sector, particularly in the automobile industry. The state also has a growing tech sector, as well as a significant agriculture industry. Michigan’s median household income varies widely by county, with Livingston County being the highest at $84,274, just above the national average, and Lake County is the lowest at $38,356. The state’s poverty rate was 13.1% in 2021.

United States Census Bureau. “Poverty in the United States: 2021.” Accessed on April 25, 2023.
United States Census Bureau. U.S. Census Bureau QuickFacts: Michigan. Accessed on April 25, 2023.

Michigan Payday Lender Complaints

Below are trends associated with some payday lenders in Michigan, as reported to the Consumer Financial Protection Bureau.

Company Name	Count
Big Picture Loans, LLC	16
LDF Holdings, LLC	12
Advance America, Cash Advance Centers, Inc.	8
Tribal Lending Enterprise, Inc	8
MoneyLion Inc.	5
ENOVA International, INC	4
Total Complaints	154

Consumer Financial Protection Bureau. Consumer Complaint Database. Accessed on April 25, 2023.

Most Common Issues

Complaint type	Count
Unexpected fees or interest	37
Struggling to pay loan	34
Can’t contact lender	17
Received a loan didn’t apply for	16
Problem with payoff process	14

What are the main reasons residents of Michigan apply for payday cash advance online or offline

Payday loans are typically used for nonnegotiable everyday expenses like your rent, utilities, and groceries. Per data reported by Pewtrust, the percentage of reasons described below

Reason	Share
Regular Expenses (Utilities, car payment)	53%
Unexpected emergency/expense	16%
Rent/Mortgage	10%
Something Special	8%
Other	5%
Did not answer	2%

Payday Lenders by City

Detroit
Grand Rapids
Warren city
Sterling Heights
Ann Arbor
Lansing
Dearborn
Clinton charter township
Canton charter township
Livonia

Macomb
Troy city
Westland
Farmington Hills
Flint
Shelby charter township
Wyoming
Southfield city
Rochester Hills
Kalamazoo

Waterford charter township
West Bloomfield charter township
Novi city
Taylor
Dearborn Heights
Pontiac
St. Clair Shores
Royal Oak
Ypsilanti charter township
Kentwood

Frequently Asked Questions

Will applying for a payday loan impact my credit?

Payday loans are typically not reported to the three major credit reporting agencies, and most lenders do not conduct credit checks as part of their application process.

What do I need to apply for a payday loan?

To apply for a payday loan in Michigan, you will need to provide proof of income, contact and banking information, and a valid government-issued ID.

Can I cancel my payday loan?

In Michigan, borrowers have a one business day cooling-off period during which they can cancel a payday loan without penalty or interest charges.

Can a payday loan lender garnish my wages?

Yes, payday lenders in Michigan can garnish up to 25% of your disposable income.

Can spouses have separate loans?

Yes, spouses can have separate loans in Michigan. Each individual can apply for a loan based on their own creditworthiness and financial situation, and the loan will be in their own name.

When will I receive my funds if I am approved for a payday loan?

If you are approved for a payday loan in Michigan, you can typically receive your funds on the same day or the next business day, depending on the lender’s policies and the time of day your application is approved.

What happens if I can’t repay my payday loan on time?

Defaulting on a payday loan in Michigan may result in additional fees and interest charges, debt collection attempts, legal action, and in rare cases, serious consequences such as wage garnishment.

When could I apply for another payday loan?

In Michigan, there is no specific waiting period between payday loans, but borrowers are limited to having only one outstanding payday loan at a time.