Michigan

Payday lenders charge exorbitant fees to borrowers without assessing their ability to repay, and the annual interest rates on these loans are in the triple digits.

For most of Michigan’s history, state laws prevented payday lenders from operating, most recently by limiting interest on consumer loans at 25%. However, in 2005, Michigan became the last state to authorize payday lending when payday lenders pushed for a carve out allowing them to charge rates of 340% APR or higher. Payday lenders drain over $103 million in fees from Michigan residents every year. Now, they want the ability to make longer-term loans at APRs as high as 200%. Michiganders do not want payday lending to expand. Instead, Michigan needs reform proven to stop the debt trap—a true...

A few high-cost lenders are evading state consumer protections through rent-a-bank schemes. Through these sham arrangements, these companies are exploding right through the interest rate limits that most states have put in place for good reason, to protect people from high-cost debt traps that drain them of their hard-earned income. In the following states, payday lenders are using banks, which aren’t generally subject to state interest rate caps, to make usurious loans that exceed the state’s rate cap. The banks engaging in these schemes are abusing their charters and enabling predatory loans...

In recent years, payday lenders have drained over half a billion dollars in fees from Michigan consumers to out-of-state companies. By charging APRs over 340%, payday lenders cost Michigan consumers over $94 million in 2016 and over $513 million over the past five years. Over two-thirds of Michigan payday stores have headquarters out of state. Michigan payday lenders disproportionately locate their stores in communities of color. While statewide there are 5.6 payday stores per 100,000 people in Michigan, payday store concentrations are higher in census tracts that have more African-Americans...