Minnesota Usury Laws

Minnesota has enacted legislation that provides for a tight regulation of personal and consumer loans. In this regard, when it comes to a personal loan made in the State of Minnesota, the usury limit is set at 8%. Individuals and some types of corporations are prohibited from extending a loan to an individual consumer that has an interest rate provision requiring payment of interest at a rate that exceeds 8% per annum. As noted, this represents one of the more restrictive usury limitations that have been implemented by any state in the Union as we move into the 21st century.

There are other statutory schemes in place in Minnesota that govern the interest rates of other types of financing situations. For example, there is a statutory code that governs the interest rates that can be charged permissibly by banks, savings and loans, and credit unions that have been duly chartered within the State of Minnesota. (It is important to note that in recent years state chartered financial institutions are declining in number. With interstate banking laws now on the books in many jurisdictions, the benefits of state chartered financial institutions have been on the decrease.

When it comes to the top interest rate that is permitted in regard to civil judgments, the State of Minnesota has established that the judgment interest rate shall be based on the “secondary market yield” for one year T-bills. This is a rather unusual interest rate structure that appears to be utilized only in Minnesota at this juncture. More often than not, when interest rates are being tied to a market gauge it is the Federal Prime Interest rate that is utilized.

The statutory provisions that govern usury and personal loans in Minnesota can be found codified at Minnesota Statutes and Session Laws at Chapters 44A and 45. As has been noted, other statutory provisions relating to different types of loans and lending practices are codified elsewhere within the Minnesota statutory scheme.

Nothing in this article should be construed as providing you legal advice. If you have any questions of concerns about lending practices and laws governing interest rates in Minnesota, you should consult with a lawyer.

Although we do take all steps necessary to keep the materials and information in this article up to date, you do need to keep in mind that the laws governing loans and interest rates in Minnesota are subject to change from time to time.

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