Payday Loan in Montana
Legal Status: Legal
Citation:
Mont. Code Ann. § 31-1-701
Loan Terms:
Maximum Loan Amount: $300
Loan Term: Max: 31 days
Maximum Finance Rate and Fees: 25%
Finance Charge for 14-day $100 loan: $25
APR for 14-day $100 loan: 650%
Debt Limits:
Maximum Number of Outstanding Loans at One Time: Two
Rollovers Permitted: None (cannot renew, repay, or refinance)
Cooling-off Period:
Repayment Plan:
Collection Limits:
Collection Fees: One $30 NSF fee; Court Costs; Reasonable Attorney’s Fees if disclosed
Criminal Action: Prohibited
Where to Complain, Get Information:
Regulator: Montana Department of Administration
Address: Division of Banking and Financial Institutions, 301 South Park, Suite 316 P.O. Box 200546 Helena MT 59620
Phone: (406) 841-2920
Fax: (406) 841-2930
Applicability: To a loan in which the lender accepts a check dated on the date the check is written or dated subsequent to the date on which the check is written and agrees to hold it for a period of days prior to presentment or deposit.
Exemptions: Any bank, or other state or federally regulated financial institution; or any retail sellers who cash checks incident to or independent of a sale and who charge no more than $2 per check for the service.
Licensing requirements: Enforced by the department of commerce. Applies to those who make deferred deposit loans and to persons who facilitate, enable, or act as a conduit for persons making these loans. Must pay an application fee of $375. Department must make certain findings before issuing or renewing a license including that the applicant’s financial responsibility, experience, character, and general fitness warrant the belief that the business will be operated lawfully and fairly. Applicant must have unencumbered assets of at least $25,000 per location and post a bond of $10,000 per location which must continue in effect for 2 years after the licensee ceases to operate in the state. The bond must be available to pay to the consumer damages for harm caused by violations of the act. Applicant must execute a sworn statement that it will not use the criminal process to collect the payment of deferred deposit loans or use any civil process not generally available to creditors to collect on defaulted loans. The department shall conduct annual examinations. Licensees must file annual reports and disclose in detail specific information about resources, assets, and liabilities of the licensee; income, expense, gain/loss, and balance sheets; total number of loans and number made and outstanding in the year; minimum and maximum amount of checks that were deferred; total number and dollar amount of returned checks; total number and dollar amount of checks recovered and amount charged off; verification that the lender has note used in collection efforts.
Loan terms: Term cannot exceed 31 days and amount, exclusive of allowable fees cannot exceed $300. Minimum loan amount is $50. Written loan documents must be provided the consumer. The holder or assignee of any check written by a consumer in connection with a deferred deposit loan takes the instrument subject to all claims and defenses of the consumer.
Required disclosures: Must give a pamphlet prepared by or at the direction of the department that explains the consumer’s rights and responsibilities, includes a telephone number of the department that handles complaints. Must provide written loan agreement that gives identifying information about the lender, an itemization of the fees and interest charges to be paid, a clear description of the consumer’s obligations, and a 14-point bold typeface statement informing the consumer that it cannot be prosecuted in criminal court for collection of the loan which must be located immediately preceding the consumer’s signature.
Permitted charges: Not more than 25% of the face amount. Insufficient fund fee cannot exceed $15 and only one can be collected and is the exclusive form of late fee allowable. May obtain reasonable attorney’s fees and court costs if judgment is entered in favor of the lender.
Prohibited acts: A list of 16 items are enumerated which parallel in many respects the model act. Included are threatening or using the criminal process to collect the debt; engaging in unfair, deceptive, or fraudulent practices; entering into a loan where the amount exceeds 25% of the consumers monthly income; making a loan to a consumer who has 2 or more outstanding deferred deposit loan; in combination with other outstanding loans, making a loan which puts the total over $300; renewing, repaying, refinancing a deferred deposit loan with the proceeds of another though a loan may be extended without additional charge; accepting any collateral; charging for insurance; including certain clauses in the loan agreement.
Enforcement: The department may revoke or suspend a license for any violation of the act. A revocation or suspension does not relieve the licensee from civil or criminal liability.
Private right of action: Any violation this act constitutes an unfair or deceptive trade practice. Consumer can sue for actual and consequential damages, and statutory damages of $1000 per violation plus costs and attorney’s fees. Consumer can also seek injunctive or other equitable relief and bring the case as a class action. Remedies are not intended to be exclusive.
Criminal/civil penalties: Any person who knowingly violates the act is guilty of a misdemeanor and is subject to a fine of not more than $1,000 or imprisonment not exceeding 6 months or both.
