Bemidji City Council hears presentation on payday loan laws – Bemidji Pioneer

BEMIDJI — The Bemidji City Council met Monday for a business session, during which members learned about Minnesota state payday loan laws.

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

Additionally, larger lenders can operate under different licenses than smaller lenders, avoiding regulations. As part of their presentation, MLF representatives argued that state regulation should be stricter to protect consumers from high tariffs.

An example of such settlements was an ordinance approved in Moorhead, Minn. The ordinance authorizes no more than two short-term loans of $1,000 or less per calendar year.

The order also does the following:

  • Allows a minimum repayment within 60 days of loan approval.
  • For loans between $350 and $1,000, lenders are not allowed to charge more than 33% annual interest.
  • Lenders are prohibited from charging an additional fee for an extension or increasing the balance owing beyond the original amount.
  • No more than four short-term consumer loan companies can be located in the city.

After the presentation, Ward 1 council member Audrey Thayer expressed interest in a similar ordinance for Bemidji.
Ward 3 Councilman Ron Johnson and Mayor Jorge Prince, meanwhile, said a better option would be to advocate for a change in state law in the Minnesota Legislature. Johnson said the topic could be taken up by lobby groups such as the Coalition of Greater Minnesota Cities and the League of Minnesota Cities for consideration in a legislative session.

Regionally, three neighboring states have passed payday loan laws:

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

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