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Continued: Faith groups urge stricter rules on payday loans

  • Article by: JENNIFER BJORHUS , Star Tribune
  • Last update: November 12, 2013 - 9:06 PM

State authorities have been aggressively pursuing unlicensed payday lenders operating in Minnesota via the Internet. Yet Minnesota is a middle-of-the-road state in terms of overall payday regulation.

Payday lenders can lend up to $350 in Minnesota, for instance, and the state caps the interest rates at varying levels by loan amount. A two-week loan for $200 at the maximum 7 percent interest rate plus a $5 fee equals an APR of about 247 percent.

About 25 lenders in the state operate under those rules. But a handful don’t. The report said some lenders qualify as an Industrial Loan and Thrift, allowing them to charge higher rates.

Among those lenders: Ace Minnesota Corp., part of the Texas-based Ace Cash Express Inc. franchise; Unloan Corp. based in Minneapolis; and Payday America Inc. in Burnsville.

Chuck Armstrong, chief legislative officer for Payday America, said the company is not avoiding payday rules. The company’s main product is not a traditional payday loan, he said, but a one-year line of credit.

 

Jennifer Bjorhus • 612-673-4683

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