The Minnesota Department of Commerce is warning consumers across the state not to borrow money from unlicensed lenders. These online lenders advertise short-term, payday or installment loans and may charge illegal interest rates.

"Consumers may have little or no recourse if they have a problem with an unlicensed lender," Minnesota Commerce Commissioner Steve Kelley said. "While an offer of immediate cash can be enticing, these loans often include interest rates and fees that exceed what is allowed by state law."

Companies are also offering loans under a "rent-a-bank" scheme, the state commerce department said. The companies offer consumer loans by partnering with a state bank outside of Minnesota, allowing them to avoid Minnesota laws that limit the interest rates a company can charge. Consumers can then be on the hook for these expensive loans.

The Minnesota Department of Commerce advises consumers to be skeptical of companies that partner with a state-chartered bank outside of Minnesota.

Other tips:

• Verify that the lender is licensed in Minnesota to provide a loan before doing business with them. Licensed companies will have a "Consumer Small Loan," "Industrial Loan and Thrift" or "Regulated Lender" license.

• Read the fine print and get a statement that details all the costs of the loan. If a lender is unwilling to provide you with the contract upfront, that's a major red flag.

• Consider alternatives: Try to get a loan from your local bank or credit union and contact creditors to request an extension or negotiate repayment schedules.

• Contact a local credit counseling service. Assistance is available from nonprofit groups. To find a service near you, check with the National Foundation for Credit Counseling.

If you have a problem with an unlicensed lender or questions about doing business with an online lender, contact the Commerce Department's Consumer Services Center at consumer.protection@state.mn.us or by phone at 651-539-1600 or 800-657-3602. The department advises that e-mail is the most effective and efficient way to raise your concern at this time.