The legal limits on service fees for payday loans are based on the loan amount. A payday lender may charge up to 15 percent on the first $100, 14 percent on the second $100, 13 percent on the third $100, 12 percent on the fourth $100, and 11 percent on the fifth and sixth $100. Here are some examples*:
*The daily interest charged ($ days) is $1.071429. Convert the daily interest charged into an APR: $1.071429 x 365 days in a year = 391 percent.
A customer has up to the end of the contract period to repay the loan amount and any applicable fees. If the payday loan and applicable fees are not paid on time, the payday lender may deposit the customer’s check. If there are insufficient funds to cover the check, the customer will be responsible for paying the face amount of the check, fees to the customer’s financial institution associated with a non- sufficient funds check, and the payday lender’s returned check fee. The current fee is $ and will be adjusted in 2021 based on a Detroit consumer price index calculation. The payday lender may also take collection action against the customer, but it may not use any criminal process to collect on the loan.
Can I extend the time I have to pay back the loan?
The law does not give payday loan customers the right to have their loan repayment periods extended: that is up to the payday lender and no repayment period-even an extended one-can exceed 31 days from the date of the loan. If a payday lender grants additional time to repay a payday loan, by law it may not charge a fee for the extension and it ount.
Customers who have taken out eight or more payday loans in a 12-month period and who cannot repay their current loan, may request an installment repayment plan for that loan. The customer must request the repayment plan, pay a charge for entering into the plan (currently $ and will be adjusted in 2021 based on a Detroit consumer price index calculation), and repay the loan in three equal installments. The installments will be due on each of the next three dates the customer receives regular wages. During the repayment term the customer will not be eligible for any additional payday loans.
What if I believe the payday lender has violated the law?
Any customer who believes a payday lender has violated the law should contact the payday lender in writing detailing the nature of the violation payday loans and check cashing Edon and providing all the evidence to substantiate the complaint. Within three days, the payday lender must respond and notify the customer of its decision.
If the payday lender determines that it did violate the law, it must return the check received from the customer and any service fees paid. The customer must still pay back the loan. The payday lender, however, will be required to pay the customer an amount equal to five times the amount of the fee charged in the transaction, but not less than $15 or more than the face amount of the customer’s check.
If the payday lender does not believe it has violated the law, it can cash the customer’s check. If the customer still believes that the payday lender has violated the law, the customer should file a complaint with the Commissioner of the Department of Insurance and Financial Services (DIFS) (see address below). DIFS will investigate complaints promptly.
Michigan law provides that a person injured by a payday lender who violates the Deferred Presentment Service Transactions Act ages and reasonable attorney fees.