When looking at installment loans in South Dakota, the starting point is the creditor’s legal identity. Not all financial institutions are state licensed money lenders and therefore may not be subject to the 36% annual cost limit. The category of the lender is important to consider when analyzing a financial offer.
How South Dakota's 36% limit applies
Annual finance charges for consumer loans from a licensed money lender under Chapter 54-4 cannot exceed 36% as provided in Section 54-4-44. Ancillary products or services and other fees incident to the extension of credit are included in the determination of the annual finance charge. Merely labeling a cost of credit a service fee does not place it outside the limit.
This framework pertains to licensed money lenders and their offering of installment, payday and title loans. While this framework does not equate these loans, the repayment schedules and the risk of collateral can vary even when the same annual limit is applied.
Ch. 54-4 does not affect State or national banks, their covered subsidiaries or holding companies, other federally insured financial institutions, and South Dakota-chartered trust companies. Don't assume a bank or credit union offer has the same 36% limit. Verify the actual creditor, rather than applying the money lender rule to every online loan.
Verify the creditor before sharing application details
The Division of Banking's money lender resources explain licensing and exemption. Verify the creditor’s current authorization with the Division or its linked licensing resources. If the lender claims an exemption, ask which authority applies and how you can verify it.
SlickCashLoan is a loan matching service. It provides your request info to potential lenders. It doesn’t set the loan terms. It doesn’t make the approval decisions. Therefore, identify the companies that get your request info and the company that will be the creditor. Not all lenders request the same information. Some may require your paystubs, others your ID, checking account info or other info. A request or preliminary response does not mean that you will be funded or approved.
Separate the original loan cost from default charges
An APR and interest-rate comparison demonstrate that the stated interest rate does not tell the full story. Along with the other costs, consider the annual cost, required fees, amount financed and cash you will receive. A charge withheld upfront can lead to less cash than the stated loan principal.
South Dakota explicitly defines default costs: see § 54-4-44.3. Late fees, check-return fees and attorney fees charged to the consumer upon default are specifically excluded for determining the 36% test. Thus, the cap does not necessarily mean that a default charge can never increase the amount owed. Review the contract and applicable law for any such charge.
Look over the total amount of scheduled payments against the total amount provided to you, and review default charges separately. Keep optional products and prices in view in the comparison. If the lender says an charged fee is outside the cap, contact the Division of Banking to clarify, and then decide on the offer.
Check every due date and the final payment
For a fixed-rate loan with equal monthly principal-and-interest payments, this calculator estimates scheduled payments and interest. It does not include every fee or contract feature. Use the lender's actual schedules when payments are: weekly, twice a month, or irregular; or when the final payment is different from the others.
Put each due date beside reliable income and essential bills. A longer term can reduce the installment while increasing total repayment. Ask whether a smaller amount would cover the expense without leaving you dependent on a new loan to make later payments.
Consider the collateral, and what happens if you default on a loan, for a secured loan. While the monthly repayment may be the same, the risks may be different if the first loan is unsecured and the second is secured by your vehicle.
Keep the contract and request a dated payoff amount
Before signing the loan agreement, make sure that the creditor, principal, APR, finance charge, payment dates and total of payments in the loan agreement match the offer that you evaluated. Ask about early-payoff conditions and get a payoff figure for the date on which you wish to make the payment. Do not assume that this figure is the same as the sum of all of the remaining installments.
Contact your lender as soon as you think you may miss a payment. Find out which fees will apply and if they will work out a different payment plan. Get any changes in writing. This includes changes to the due dates and the total amount you will pay. Keep your contracts and records of your payments. You may need to give these to the Division of Banking if you are disputing a charge.