Michigan Payday Loan Laws and Protections
A consumer guide to Michigan's deferred-presentment limits, tiered fees, database checks, cancellation right, and repayment options.
How Payday Loans Work in Michigan
Michigan law describes payday loans as deals that delay the collection of a customer's payment. In this model, the customer pays a fee, gets cash, and gives the lender a check or some other form of payment that the lender collects later. The collected payment cannot be more than thirty-one days after the transaction.
Before fulfilling a request, the provider has to consult the shared electronic transaction registry of Michigan. The registry helps the provider ascertain whether the request is compliant with the state’s open-transaction criteria. A borrower can maintain up to two transactions open simultaneously and only one at any given provider. Allowed charges are excluded from the total of the $600 limit for each transaction.
Michigan Service Fees and Cost Examples
Michigan uses six $100 bands instead of a single percentage applied to the total amount for its service-fee ceiling calculation. The bands break down as follows. The first $100 band is capped at 15%. The second band is capped at 14%. The third band is capped at 13%. The fourth band is capped at 12%. All the remaining bands, which is the fifth and sixth, are capped at 11%. For the full $600 amount, the total for those bands would be $76.
A lender may pass on some or all approved database verification fees to the consumer. According to DIFS, the approved transaction fee is $2.40, effective September 1, 2025. The lender cannot pass the $1 state transaction fee to the consumer.
The contract must specify all fees and present costs as an annual percentage rate (APR). As an example, Michigan's consumer alert calculates that a $15 fee on $100 for 14 days results in a 391% APR before the database verification fee. The APR annualizes the short-term charge. The amount due is still the amount advanced plus the permitted charges in the agreement.
Cancellation, Extensions, and Repayment Plans
To cancel, a customer must inform the provider and return the money before the close of business on the next day the office opens. The provider must refund the service fee. Please refer to your agreement to check the exact closing time of the office and retain proof of your cancellation.
A provider can extend the time for a customer or client, however, they cannot charge for the extension or add to the original balance. After giving an extension, the maturity date must be within a maximum of thirty-one days of the transaction date.
For every customer, after the customer's eighth transaction with any provider within a period of 12 months, the provider must offer a written three-payment plan for that specific transaction, as well as subsequent transactions during the same period. The customer must request this plan within 30 days after the transaction matures. The lender reserves the right to charge a $23.38 administration fee. During the open installment plan, no new transaction is permitted.
Before Borrowing in Michigan
Before disclosing personal or financial information to a lender, check that they are legally allowed to provide lending. Read and save the signed agreement and authorization to pay. Important expenses should be compared to the cash received, all fees, the annual percentage rate, the payment due, the payment due date, and the terms regarding returned payments. An approval promise that asks you to pay via gift card, wire transfer, or cryptocurrency is a scam and should be considered as such.
Michigan Payday Loan Laws & Regulations
DIFS, the state department that oversees the regulation of insurance and financial services, applies Michigan Compiled Laws sections 487.2121 to 487.2173. In 2026, two bulletins increased the returned-check charge and the charge for the administration of repayment plans. Consequently, some older state consumer documents show the charges at the previous, lower amounts.
| Regulation | Michigan Rule |
|---|---|
| Governing law | Michigan Compiled Law sections 487.2121–487.2173 |
| Regulator | Regulator: DIFS, the agency of Michigan’s state government that manages insurance and financial-service providers. |
| Maximum amount | Transaction limit before fees apply is $600. |
| Open transaction limit | Maximum of two, no more than one with any single provider |
| Maximum term | Transactions are valid for a maximum of 31 days. |
| Maximum service fee | The limit of all service fees ($76) on $600 uses percentage bands running from 15% to 11%. |
| Database verification fee | Customer may incur a charge of up to $2.40 for the approved transaction |
| Cancellation | To receive a refund of fees, return the proceeds by the close of business on the next day the office is open |
| Renewal or extension | No fee renewal; no extension may add a fee or increase the balance |
| Repayment plan | For the eighth and subsequent transactions within a 12-month period, three installments are available; requests are accepted within 30 days of the end of the term; $23.38 fee for the 2026–2030 period |
| Returned-check charge | Up to $38.96 for 2026–2030 and any fee charged by the customer's financial institution |
| Criminal collection process | A provider is prohibited from using criminal means to enforce collection |
Review the Michigan consumer alert for the rules of payday loans. Use the DIFS resources for license verification and the most recent bulletins on fees.
Regulator, statute, and 2026 fee bulletins were checked on September 6, 2026. Changes can happen in state law and regulator directives.