Texas makes every payday and title-loan broker in the state hand you a form, and the form has the number printed right on it. Payday loans: 415 percent average APR. Auto title loans: 223 percent. In dollars, the same form says a payday loan runs $34.14 in fees and interest for every $100 you borrow for a month.
In Minnesota the most a payday lender can charge is 50 percent APR, and “No other charges or payments are permitted”. On $100 for 30 days, that works out to about $4.11.
This is a round in my series “Minnesota vs. Texas: who actually protects the debtor?” The series opened on the paycheck, where Texas won by a mile, at /news/minnesota-vs-texas-wage-garnishment-571-922/. Fair is fair. This one goes to Minnesota by more than that.
Texas has a 10 percent usury limit, and payday loans walk right around it
The Texas Constitution gives the Legislature the power to “fix maximum rates of interest”, and it supplies a default for when the Legislature hasn’t: “in the absence of legislation fixing maximum rates of interest all contracts for a greater rate of interest than ten per centum (10%) per annum shall be deemed usurious”. Tex. Const. art. XVI, § 11. The Finance Code says it again: “The maximum rate or amount of interest is 10 percent a year except as otherwise provided by law.” Tex. Fin. Code § 302.001(b).
The Legislature has provided otherwise, plenty. Chapter 342 lets a licensed consumer lender charge add-on interest of “$18 for each $100 per year” on the first slice of a loan, § 342.201(a)(1), or simple interest up to “30 percent a year” on the first slice, § 342.201(e)(1), with lower brackets above that. Small loans get an alternative: an acquisition charge of up to $10 plus “$4 a month for each $100 of cash advance”. § 342.252(a)(3). Those are real limits, and on a small loan they already climb well past 10 percent.
The payday business doesn’t run through chapter 342. It runs through chapter 393, a 1997 statute about “credit services organizations”, meaning companies paid for things like “obtaining an extension of consumer credit for a consumer”. § 393.001(3)(B). In 2011 the Legislature added a licensing subchapter for the version that arranges payday and auto title loans and gave it a name: a “credit access business”. §§ 393.221(1), 393.601(2) (H.B. 2592 and H.B. 2594, effective January 1, 2012).
Here’s how the Texas Office of Consumer Credit Commissioner describes the arrangement. The business obtains credit “from an independent third-party lender”. The lender “is not licensed, rather the credit access business that serves as the broker is the licensee”. And the business “charges a fee to the consumer for obtaining the third-party loan; this fee is usually calculated as a percentage of the loan amount.”
Two pieces, then. The lender’s interest, which the contract has to disclose separately, and the broker’s fee. § 393.201(c)(5). The state’s own disclosure form splits them the same way: “Interest paid to lender” on one line, “Fees paid to” the business on the next. And here’s what chapter 393 says about the fee:
A credit access business may assess fees for its services as agreed to between the parties.
— Tex. Fin. Code § 393.602(b) (emphasis added)
That’s it. I read all of chapter 393 looking for a ceiling on that fee. There isn’t one. The fee “may be calculated daily, biweekly, monthly, or on another periodic basis”, and it “may not be charged unless it is disclosed.” Id. Disclosed, yes. Limited, no.
What do the Texas numbers look like?
The state publishes them, which I’ll give Texas credit for.
The disclosure every credit access business must hand a payday customer, under § 393.223, carries a chart of “Average APR” by loan type. Credit cards, 22 percent. Payday loans, 415 percent. Auto title loans, 223 percent. In dollars of “Average fees & interest per $100 borrowed over 1 month”: $34.14 for payday, $19.45 for auto title.
The same form tells the borrower what happens next: “Of 10 people who get a new single-payment payday loan”, “1 will renew 5 or more times or will never pay off the loan”. The form says that data comes from 2022 reports.
Then there’s the annual data. In its CAB Annual Data Report for calendar year 2025, the Office reported what credit access businesses charged in fees on single-payment payday loans, installment payday loans, single-payment auto title loans, and installment title loans. Add the four columns and you get $1,934,243,997. Add the four columns of new loans made that year and you get $1,365,720,735. The fee figure counts fees on refinances too, so it isn’t a markup on the new money. It’s still more in broker fees than the businesses arranged in new loans.
And the refinancing column is the one I’d read twice. Of the single-payment auto title loans paid out in 2025, 4,849 had been refinanced more than 10 times first.
Minnesota’s rule: 50 percent, every fee inside it, and a test above 36
Minnesota has two payday statutes. Section 47.60 covers a “consumer small loan”, a single-payment unsecured loan of $350 or less. Section 47.601 covers a “consumer short-term loan” with a principal of “$1,300 or less” that requires a payment of more than 25 percent of the principal within 60 days. § 47.601, subd. 1(e). Both carry the same price cap:
In connection with a consumer small loan, a consumer small loan lender may charge an annual percentage rate of up to 50 percent. No other charges or payments are permitted or may be received by the lender in connection with a consumer small loan.
— Minn. Stat. § 47.60, subd. 2(a) (emphasis added); see § 47.601, subd. 2(e)
The small-loan statute does leave two things outside that 50 percent, and both kick in only when something goes wrong: a bounced-check charge under § 604.113 if the loan was made against your personal check, and, after the due date, a contract rate of up to 2.75 percent a month on the loan proceeds still unpaid. § 47.60, subd. 2(c), (e).
And the rate means everything: “Annual percentage rate includes all interest, finance charges, and fees.” § 47.60, subd. 1(c). And the lender isn’t just whoever signs the note. The definitions reach a business “engaged in the business of making or arranging” these loans. § 47.60, subd. 1(b); see § 47.601, subd. 1(f). On my reading, Minnesota leaves no second envelope to put a broker’s fee in.
Above 36 percent, the lender has to underwrite. Any payday loan over 36 percent has to satisfy § 47.603. § 47.60, subd. 2(g); § 47.601, subd. 2(f). That statute says the lender “must not make a payday loan” unless it “first determines” that “the borrower has the ability to make the payday loan payment when the payday loan payment comes due at the end of the loan period.” § 47.603, subd. 3. That determination runs on a debt-to-income ratio, and the statute calls it reasonable if the borrower can cover major obligations, the loan, and basic living expenses “during the period ending 30 days after repayment of the loan.” Id., subd. 5(b).
I walked through the rest of § 47.60 at /news/minnesota-consumer-small-loans-47-60/, and I won’t repeat it here. One piece of history belongs in this comparison, though, because Minnesota wasn’t always the good guy.
The 50 percent cap came in 2023 Minn. Laws ch. 57, art. 3, Senate File 2744, signed May 24, 2023, “effective January 1, 2024, and applies to consumer small loans and consumer short-term loans originated on or after that date.” The 2023 act struck the old fee schedule. Under it, on a loan over $50 and up to $100, “a charge may be added equal to ten percent of the loan proceeds plus a $5 administrative fee”. That’s $15 on $100. Over two weeks, my math puts it at about 391 percent APR. Before 2024, Minnesota’s payday price looked a lot like Texas’s does now.
The 36 percent number came from Washington, and Texas knows it
The federal Military Lending Act says a creditor “may not impose an annual percentage rate of interest greater than 36 percent” on consumer credit to a “covered member” of the armed forces or a dependent. 10 U.S.C. § 987(b). “Interest” there “includes all cost elements associated with the extension of credit, including fees, service charges, renewal charges”, and more. § 987(i)(3). The regulation says it in plainer English: “A creditor may not impose an MAPR greater than 36 percent”. 32 C.F.R. § 232.4(b).
Minnesota’s statute doesn’t cite the federal law, and its ceiling is 50, not 36. But the all-in definition is the same idea, and 36 is exactly where Minnesota starts making the lender prove you can pay.
Here’s the part I enjoyed. Texas wrote the federal rule into chapter 393 itself. A payday or title loan arranged by a credit access business for a servicemember or a dependent “must comply with 10 U.S.C. Section 987 and any regulations adopted under that law, to the extent applicable.” Tex. Fin. Code § 393.625. The contract has to say so, too. § 393.201(c)(4). So Texas knows the number. It just saves it for people in uniform.
The Texas cities tried. They capped the size of the loan, not the price.
Since chapter 393 leaves the fee to “the parties”, several Texas cities went after the product instead. The state’s own regulator noted it in a December 11, 2012 bulletin: Dallas, Austin, and San Antonio “have enacted ordinances restricting certain renewal activities by CABs and limiting the number of installments a transaction may have.” Dallas’s version, effective January 1, 2012, caps a payday cash advance at “20 percent of the consumer’s gross monthly income”, limits an installment loan to four installments, and says a single-payment loan “may not be refinanced or renewed more than three times”. Dallas City Code § 50-151.3(a), (d), (e).
The same bulletin describes what some businesses did about it. A branch inside the city made a 30-day loan, and if the borrower couldn’t pay, it proposed that the borrower “go to another branch location outside the city limits and obtain a CAB loan to pay off the original loan”. The Office called that a practice “whose intent appears to be circumvention of the law”, and in the same breath conceded that it “does not have authority to enforce the city ordinances”.
None of it touches the fee. The Dallas restrictions section I read doesn’t mention price at all.
What about a Minnesotan who borrows online from a Texas company?
Start with Texas’s own reach. Its credit-access-business subchapter applies to a consumer “who is located in this state at the time of the transaction”. Tex. Fin. Code § 393.602(a). A Minnesotan at his kitchen table in Duluth isn’t.
Minnesota wrote its side with the internet in mind. A short-term loan is “deemed to take place in the state of Minnesota if the borrower is a Minnesota resident and the borrower completes the transaction, either personally or electronically, while physically located in the state of Minnesota.” § 47.601, subd. 5. The contract can’t pick another state’s law or another state’s forum, and a clause that tries is “void and unenforceable.” § 47.601, subd. 2(a)–(b). An internet lender with no Minnesota storefront still counts as a business that has to file with the commissioner before making small loans here. § 47.60, subd. 3.
Then the 2023 Legislature added anti-evasion language to both statutes, and it reads like somebody had the Texas model on the desk. No one may make, offer, assist, or arrange a loan above the allowed rate “through any method, including mail, telephone, Internet, or any electronic means, regardless of whether a person has a physical location in Minnesota.” § 47.60, subd. 8(a)(3); § 47.601, subd. 5a(a)(3). A company that calls itself “an agent or service provider” is still the lender if it holds “the predominant economic interest, risk, or reward”, or if it both “markets, solicits, brokers, arranges, or facilitates a loan” and holds the right to acquire the loans. § 47.601, subd. 5a(b). And among the circumstances that weigh toward treating a company as the lender is that it “indemnifies, insures, or protects a person not subject to this section from any costs or risks related to a loan”. Id., subd. 5a(c)(1).
Put that next to the Texas data. The 2025 report counts loans and refinances where the credit access business “repaid the third-party lender under a contractual obligation, guaranty, or letter of credit”: 959,394 of them on installment payday loans alone. On my reading, a broker standing behind the lender like that is the very first circumstance subdivision 5a(c) lists. But it’s a totality test, and the subdivision also asks whether “the transaction is structured to evade the requirements of this section”, so no single fact settles it.
The remedies have teeth. Anyone who breaks the contract rules (the rate cap included), the collection rule, or the anti-evasion rule, and can’t show a “bona fide error”, is liable to the borrower for “all money collected or received in connection with the loan”, actual damages, “statutory damages of up to $1,000 per violation”, and attorney fees, and a short-term loan carrying charges above the § 47.60 limits “is void, and the borrower is not obligated to pay any amounts owing”. § 47.601, subd. 6(a)–(b). Section 47.60 borrows the same remedies. § 47.60, subd. 6. The Attorney General enforces § 47.601 under § 8.31, § 47.601, subd. 7, and the Consumer Fraud Act sits alongside it, as I covered at /news/minnesota-consumer-fraud-act-deceptive-trade-practices/.
One limit, so nobody overreads this. These caps cover loans that fit the two definitions: $350 single-payment, or up to $1,300 with more than a quarter of the principal due within 60 days. A larger loan is governed by other Minnesota law. Minnesota’s general usury statute is its own story, at /news/minnesota-usury-business-loan-interest/, and if you want to see how an APR gets computed on a deal that doesn’t advertise one, I did the math at /news/minnesota-merchant-cash-advance-no-disclosure-law/.
The scorecard
Minnesota, by a mile. Fifty percent, every fee inside it, an ability-to-repay test above 36, and anti-evasion language aimed squarely at the broker model. Texas caps the lender’s interest and lets the broker set its own fee, and the state’s own form puts the result at 415 percent.
Texas does get credit for honesty. Its disclosure tells a borrower the average APR before he signs, and its regulator publishes the fee totals every year. And its biggest cities did what the Legislature didn’t.
Texas makes the payday broker tell you the average is 415 percent. Minnesota makes the ceiling 50.
Madgett Law, LLC
Madgett Law, LLC represents Minnesota consumers in credit, lending, and debt collection disputes, including claims under the state’s small-loan and short-term-loan statutes. If you took out a payday or short-term loan online and the price doesn’t look like 50 percent, start with the loan documents and who actually made the loan. Read about our distressed asset protection practice, then send us a message.
Sources: Minn. Stat. § 47.60, subd. 1(a)–(c) (consumer small loan; lender includes one arranging loans; APR includes all interest, finance charges, and fees), subd. 2(a), (c), (e), (g) (50 percent cap; no other charges; post-maturity rate; return-check charge; § 47.603 above 36 percent), subd. 3 (internet lenders must file), subd. 6 (remedies by reference to § 47.601, subd. 6), subd. 8(a)(3) (no evasion); § 47.601, subd. 1(e)–(f) (consumer short-term loan; lender), subd. 2(a)–(b), (e)–(f) (no foreign choice of law or forum; 50 percent cap; § 47.603 above 36 percent), subd. 5 (transaction deemed in Minnesota), subd. 5a(a)(3), (b), (c) (no evasion; lender status; totality and structured-to-evade test; circumstance (1)), subd. 6(a)–(b) (bona fide error; violations of subds. 2, 3, 5a; damages; void loan), subd. 7 (Attorney General enforcement); § 47.603, subds. 2, 3, 5(b) (ability to repay) (revisor.mn.gov); 2023 Minn. Laws ch. 57, art. 3, §§ 4–11 (S.F. 2744; effective January 1, 2024, for loans originated on or after that date), including the fee schedule struck from § 47.60, subd. 2(a). Tex. Const. art. XVI, § 11; Tex. Fin. Code § 302.001(b); § 342.201(a)(1), (e)(1); § 342.252(a)(3); § 393.001(3); § 393.201(c)(4)–(5); §§ 393.221(1), 393.601(2) (Acts 2011, 82nd Leg., R.S., ch. 1301 (H.B. 2592) and ch. 1302 (H.B. 2594), effective January 1, 2012); § 393.223; § 393.602(a)–(b); § 393.625 (Texas Legislative Council, Texas Constitution and Statutes). Texas Office of Consumer Credit Commissioner, Credit Access Businesses (occc.texas.gov/industry/cab); Payday Loan, One Payment Cost Disclosure (rev. 2024) (average APR and average fees and interest per $100 borrowed over one month; repayment figures from 2022 reports); CAB Annual Data Report, CY 2025 (publication date April 24, 2026) (items 2E, 3, 4, 9; totals computed by the author); Credit Access Business Bulletin, City Ordinances (Dec. 11, 2012). Dallas City Code § 50-151.3(a), (d), (e) (Ord. 28287, eff. Jan. 1, 2012) (City of Dallas, Code Compliance). 10 U.S.C. § 987(b), (i)(3) (United States Code, 2024 ed., govinfo); 32 C.F.R. § 232.4(b) (eCFR). The $4.11 and 391 percent figures are the author’s arithmetic on a 365-day year. This article is general information about Minnesota law, not legal advice. Reading it does not create an attorney–client relationship, and no outcome is promised or implied.