Michigan Payday Loans

If you are a resident of Michigan and you need some extra cash before your next payday, you might consider applying for a payday loan. A payday loan is a short-term loan that you can borrow up to $600 to cover your expenses until your next paycheck. However, before you take out a payday loan, you should be aware of the laws and regulations that govern this type of lending in Michigan.

According to the Michigan Compiled Laws, Section 487.2121 et seq., also known as the Deferred Presentment Service Transactions Act (Act 244 of 2005), payday loans are legal in Michigan. Payday lenders must be licensed by the state and follow the rules set by the Act. Some of the rules are:

- You can only have two payday loans at a time from different lenders.

- You can only borrow up to $600 per lender.

- You can only repay your loan within 31 days or less.

- You can only be charged a service fee of 15% of the first $100, 14% of the second $100, 13% of the third $100, 12% of the fourth $100, and 11% of the fifth and sixth $100. This means that the maximum service fee for a $600 loan is $76.

- You can only be charged a verification fee of up to $1 per transaction.

- You can only be charged a returned check fee of up to $25 if your payment is dishonored by your bank.

- You can only roll over your loan once with the same lender, and you must pay 50% of the service fee plus an additional service fee on the new amount.

- You have the right to cancel your loan by the end of the next business day after you sign the agreement by returning the full amount in cash or by other means agreed by the lender.

- You have the right to request an installment repayment plan if you are unable to repay your loan on time. The lender must offer you a plan that allows you to repay your loan in at least four equal installments over at least 60 days.

Payday loans can be a convenient way to get some quick cash when you need it, but they also come with high costs and risks. According to a report by The Pew Charitable Trusts, the average annual percentage rate (APR) for payday loans in Michigan is 369%, which is much higher than the average credit card APR of 17%. Payday loans can also trap you in a cycle of debt if you cannot afford to repay them on time or if you have to take out another loan to cover your previous one.

Therefore, before you apply for a payday loan in Michigan, you should consider other alternatives that may be cheaper and safer for your financial situation. Some of these alternatives are:

- Asking your employer for an advance on your paycheck or using an app like Earnin that lets you access your earned wages before payday.

- Applying for a personal loan from a bank, credit union, or online lender that may offer lower interest rates and longer repayment terms than payday loans.

- Seeking help from local charities, nonprofits, or government programs that may provide financial assistance or counseling for your needs.

- Using a credit card or a cash advance from your credit card if you have one and can pay it off quickly.

- Borrowing money from your family or friends who may be willing to lend you some cash without charging interest or fees.

Payday loans in Michigan are legal and regulated, but they are not the only option for getting some extra cash before your next payday. You should weigh the pros and cons of payday loans and compare them with other alternatives before you apply. You should also read the terms and conditions of your loan agreement carefully and make sure you understand how much you will have to pay back and when.