• Payday loans charge high service fees3D dollar sign with multiple smaller dollar signs. image by Steve Johnson from Fotolia.com
  
  Payday loans are loans that borrow against upcoming paychecks. They are known for high fees and potentially predatory lending. Michigan allows payday loans, and all payday lenders must be registered with the state. However, the state places some limits on the amount that can be borrowed, how much can be charged and the time frame of the loan.
  
  

Loan Limits

• Michigan restricts lenders to issuing only one payday loan per customer. However, customers can get a second payday loan from another lender. No one can have more than two payday loans. The maximum payday loan in Michigan is $600. The maximum service charge depends on the amount lent. The first $100 can be assessed a 15 percent fee, the second $100 a 14 percent fee, the third $100 a 13 percent fee, the fourth $100 a 12 percent fee and money over $400 an 11 percent fee. The lender can also charge a 45 cent fee for verification.
  
  

Time Frame

• In Michigan, payday loans can be no longer than 31 days. No renewals or rollovers are allowed unless the lender agrees to not charge any additional penalties. Michigan also allows customers who have at least eight payday loans within the past 12 months to have a repayment period. Lenders may charge a fee of $15 for repayment plans but no additional fees. The repayment plan consists of three equal payments to be paid on the next three paydays of the borrower.
  
  

Legalities

• If the payday lender attempts to cash the borrower's check and the check is returned for insufficient funds, the borrower is responsible for both the fees the bank charges and a fee from the payday lender of up to $25. Only one insufficient-funds charge may be assessed to the borrower. However, Michigan prohibits lenders from taking criminal action against borrowers who cannot repay what they have borrowed.