Payday lenders have long promoted quick cash as a lifeline during financial hardship, but in reality, these high‑cost loans often trap borrowers in a cycle of debt. In 2023, Minnesota joined 21 states and the District of Columbia in capping annual interest rates on payday loans at 36%. As a result, Minnesotans are expected to save more than $4.5 million in fees every year—money that can instead support household needs, strengthen financial stability, and circulate within local economies.
This report, co-authored by Exodus Lending, details how a broad, non‑partisan coalition of advocates and community partners secured this legislative victory after a decade of persistent work. The report also examines the impact of the rate cap nearly two years after implementation, drawing on focus groups with former payday loan borrowers. Their experiences reveal how life changes when high‑cost payday loans are no longer part of the financial landscape.
The findings are clear: borrowers are better off without payday lending, and they overwhelmingly support strong consumer protections. The report highlights advocacy strategies that proved effective in Minnesota and could be replicated in other states pursuing similar reforms.
Key Findings
- Storefront payday lending exacerbated financial instability and imposed significant emotional burdens on Minnesota borrowers.
- Borrowers demonstrate adaptive strategies in the absence of storefront payday lending.
- Online lenders continue illegally targeting financially vulnerable Minnesotans.
- Borrowers express relief that storefront payday lending is gone and show strong support for continued regulation.