Maine Payday Loan Law and Legislation

Maine Payday Loan Regulations
Legal Status
Legal
Interest Rate (APR)
30% APR; In Fact - 217%*
Minimum Loan Amount
Not Specified
Maximum Loan Amount
$2,000
Minimum Loan Term
Not Specified
Maximum Loan Term
Not Specified
Finance Charges
Alternative to small loan cap:
<$75 = $5;
$75-$250 = $15;
>$250 = $25

Payday lending is legal in Maine (however, restrictions apply).

Maine has a $2,000 limit on payday loans offered in the state. The terms of payday lending in Maine are very restrictive, while there is no limit to the length of the loan term, the loans are subject to small loan cap of 30% APRs for loans up to $2,000. The finance charges should not exceed $5 for a loan up to $75; $15 for $75-$250 loans; and $25 for loans above $250. Criminal actions are prohibited.

Payday loans are heavily regulated in Maine. They are not permitted in the state unless the lender is fully licensed and supervised. In fact, the state of Maine has some of the strictest regulations in the entire country. Any business that is not on the list of exempted businesses is not allowed to cash post-dated checks.

These regulations have been in place in place for years and, thanks to them, very few licensed payday lenders can presently operate in the state.

Maine Payday Lending Statutes

In the state of Maine, the following laws regulate payday lending: Me. Rev. Stat. Ann. tit 9-A §1-201 and Me. Rev. Stat. Ann. tit. 9-A §1-301.

All consumer lenders, including payday lenders, are required to obtain a “Supervised lender” license. Another important requirement is that all lenders also must post a $50,000 consumer protection bond with the state.

The law reads that Supervised Lenders are exempt from 32 M.R.S.A. 6138(4)(D) which prohibits a check casher from cashing or advancing any money on a postdated check.”

Which means that it is not so easy to be a payday lender in the state. Such strict regulations are very unfavorable in terms of profit, thus, there are not many lenders in the state. In fact, there was only 1 in 2001 and only 7 in 2005. According to the 2016 report on payday lending published in the Journal of Economics and Business, there were only 11 fully licensed lenders, which was by the way the smallest number even compared to other states with similar restrictive laws.

The list of currently licensed lenders (15 as of 2018 – 2019) can be accessed on the website of the Bureau of Consumer Credit Protection.

Also, according to the state Legislature, all payday lenders doing business with Maine residents are required to have a license, “wherever the lender is located,” 9-A MRS sec.1-201(1)(C).

Thus, things get complicated when it comes to online companies. Taking strict license requirement into consideration, some companies choose to operate illegally in the state. They are unlicensed tribe-based lenders, lenders licensed in other states, and foreign-based lenders. All of them are hard to monitor as long as they are literally not feasible.

Loan Amount in Maine

  • There is no specific loan amount mentioned with regards to payday loans, however, the $2,000 can be referred to as the recommended maximum.

Rates, fees and other charges in Maine

  • There is a small loan rate cap that prohibits charging more than 30% APR for loans less in amount than $2000. The law reads as follows:

“2.    With respect to a consumer loan, other than a loan pursuant to open-end credit, a lender may contract for and receive a finance charge calculated according to the actuarial method, not exceeding the equivalent of the following:

  • The total of:
    • 30% per year on that part of the unpaid balances of the amount financed that is $2,000 or less;
    • 24% per year on that part of the unpaid balances of the amount financed that is more than $2,000 but does not exceed $4,000; and
  • “Maine law also provides that lenders, instead of using the above schedule, can assess a so-called “minimum finance charge”: more than $5 for a loan up to $75; more than $15 for $75-$250 loans; and it is $25 for loans above $250 accordingly. These are not very high rates and they allow borrowers not to get into the circle of indebtedness. (9-A MRS sec. 2-401(7))

Real APR for payday loans in Maine can reach 217% (*According to the Center for Responsible Lending 2019: “Typical APR based on average rate for a $300 loan advertised by largest payday chains or as determined by state regulator, where applicable.”).

Maximum term for a payday in Maine

  • Maine payday loan regulations mention nothing about specific loan terms and rollovers.
  • Nothing is also mentioned about cooling-off periods between loans.
  • There are no requirements for extended repayment plans either.

Consumer Information

  • All the criminal actions against borrowers are prohibited in the state of Maine.

In case of any payday loan issues and inquiries customers can contact the Maine Office of Consumer Credit Regulation for more information.

The History of Payday Loans in Maine

  • Mid-2000’s – There were certain national banks that made payday loans for several years. However, they stopped doing so after federal regulations were adopted.
  • Since 2000s – Maine Consumer Credit Code (Rev. Stat. Ann. tit 9-A §1-201) has been regulating payday loan industry for years. The same laws apply as of April 2019.
  • 2006 – The Military Lending Act effectively capped payday loans offered to the military at 36% APR. This federal law has no exceptions, thus, no lender in Maine is now allowed to offer loans to the military in excess of 36% APR.
  • June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (expected in November 2020).
  • 2017 – While the rule is not yet in place, payday lenders do not stop their attempt to broaden their limits in Maine and to find loopholes in the law. They tried to pass a bill that would authorize high-interest, long-term loans, and also to charge a new origination fee, and a new monthly maintenance fee. Unfortunately, the attempt was unsuccessful, and the situation in the industry stays the same at the moment.

(As of April 2019)

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