Payday lending is legal in North Dakota.
North Dakota has a $500 payday loan limit. Payday loans can be taken for the period up to 60 days with the maximum finance charges of 20% of the amount advanced; actual APR equals 487%. Rollovers are allowed. Criminal actions against borrowers are prohibited.
Payday loans in North Dakota have a long history. They existed even before 2001 when the first payday loans regulations were enacted. Since then, there has been some changes in the industry regulations, however, at the present moment, the state has much more lenient laws with regard to payday loans than the neighboring South Dakota, for instance.
North Dakota Payday Lending Statutes
Payday loans in North Dakota are regulated by N.D. Cent. Code 13-08-01 et seq. The laws in North Dakota are similar to the laws regarding payday loans in many US states. The law covers both store-front and online lenders alike.
Every client who gets a loan in North Dakota should also get a written agreement. The agreement should contain the customer’s name; the rates charged, the date when the loan was deposited, the loan sum, and the APR.
The borrower should get the document stating all the charges and fees; all the amounts should be listed in US dollars. The client has the right to return the loan back by 5 p.m. of the day after applying for this loan without charges.
Loan Amount in North Dakota
- Borrowers can take maximum $500, but there is no limit on minimum sum.
“A licensee may not engage in a deferred presentment service transaction with a customer who has an aggregate value of all outstanding obligations from any one customer exceeding $600 which is payable to the same or any other licensee.” (N.D. Cent. Code 13-08-01 et seq.)
Rates, fees and other charges in North Dakota
- Lending companies operating in North Dakota can charge percentage rates up to 20% of the loan amount, which means that customers will pay up to $20 on each $100 borrowed.
“A licensee may charge a fee for the deferred resentment service, not to exceed 20 percent of the amount paid to the customer by the licensee. This fee may not be deemed interest for any purpose of law. No other fee or charge may be charged for the deferred presentment service, except that a fee, not to exceed the cost to the licensee, may be charged for registering a transaction on a database administered or authorized by the commissioner.” (N.D. Cent. Code 13-08-01 et seq.)
Real APR for payday loans in North Dakota can reach 487% (*According to the Center for Responsible Lending 2019: “Typical APR based on
Maximum term for a payday in North Dakota
- The difference is that in the state of North Dakota a borrower has the right to keep a loan for 60 days, and the average limit in other states is 30 days.
- Rollovers are allowed in North Dakota, however, the fee amount cannot exceed 20% of the loan.
- A cooling-off period of 3 business days is required before the next consecutive loan.
- Collection charges ($20) may be filed in case the client closes their bank account or if a borrower passes a check being aware of the fact that there is no money on the account.
- It is prohibited in North Dakota for lenders to file charges in court to return the funds if a customer doesn’t repay the loan in time.
In case of any assistance in regard to payday loans, one can contact the North Dakota Department of Financial Institutions (DFI).
The History of Payday Loans in North Dakota
- 1990s – Payday lenders operated under the roof of pawn shops and charged triple-digit interest rates. The state Legislature had to request pawn shops to seize offering payday loans at one point when the rates got excessive. Yet, there was no separate regulation for the industry.
- July 1, 2001 – The first time payday loan law was enacted in North Dakota. The law set a limit to loan interest and charges at 20% of the loan amount. Many payday loan stores opened officially.
- 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 North Dakota is now allowed to offer loans to the military in excess of 36% APR.
- April 1, 2013 – N.D. Century Code 13-08 was amended.
- June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (the federal rule is expected in November 2020).
- Present days – North Dakota still sticks to the same payday loan regulations it enacted in the 2000s.
(As of May 2019)