Maine Payday Loan Law and Legislation

Payday loans are heavily regulated in Maine. They are not permitted in the state unless the lender is fully licensed and supervised. In fact, the state of Maine has some of the strictest regulations in the entire country. Any business that is not on the list of exempted businesses is not allowed to cash post-dated checks.

These regulations have been in place in place for years and, thanks to them, very few licensed payday lenders can presently operate in the state.

Maine Payday Lending Statutes

In the state of Maine, the following laws regulate payday lending: Me. Rev. Stat. Ann. tit 9-A §1-201 and Me. Rev. Stat. Ann. tit. 9-A §1-301.

All consumer lenders, including payday lenders, are required to obtain a “Supervised lender” license. Another important requirement is that all lenders also must post a $50,000 consumer protection bond with the state.

According to Main law 32 M.R.S.A. 6138(4) (D), a licensed supervised lender is exempt from the law prohibiting a check casher from advancing or cashing amounts on postdated checks.

Which means that it is not so easy to be a payday lender in the state. Such strict regulations are very unfavorable in terms of profit, thus, there are not many lenders in the state. In fact, there was only 1 in 2001 and only 7 in 2005. According to the 2016 report on payday lending published in the Journal of Economics and Business, there were only 11 fully licensed lenders, which was by the way the smallest number even compared to other states with similar restrictive laws.

The list of currently licensed lenders (15 as of 2018 – 2019) can be accessed on the website of the Bureau of Consumer Credit Protection.

Also, according to the state Legislature, all payday lenders doing business with Maine residents are required to have a license, “wherever the lender is located,” 9-A MRS sec.1-201(1)(C).

Thus, things get complicated when it comes to online companies. Taking strict license requirements into consideration, some companies choose to operate illegally in the state. They are unlicensed tribe-based lenders, lenders licensed in other states, and foreign-based lenders. All of them are hard to monitor as long as they are literally not feasible.

Loan Amount in Maine

• There is no specific loan amount mentioned with regards to payday loans, however, the $2,000 can be referred to as the recommended maximum.

Rates, Fees and Other Charges in Maine

• There is a small loan rate cap that prohibits charging more than 30% APR for loans less in amount than $2000. The law reads as follows:

• As it pertains to consumer loans, outside of loans pursuant to open-end credit, licensed lenders are permitted to contract and receive finance charges so long as they do not exceed the following:
  • 30% each year on any balances that remain unpaid for amounts financed for values of $2,000 or less; and;
  • 24% each year on any balances that remain unpaid for amounts of more than $2,000 but not above $4,000; and
  • 18% each year on balances that remain unpaid for amounts that are greater than $4,000 (Me. Rev. Stat. Ann. tit 9-A §1-401).

• In Maine, a lender may also apply minimum finances charges, instead of using the schedule notes above. The charge may be more than $5 on any loan up to $50; greater than $15 on a loan between $75 and $250; and it can assess a $25 charge on loans greater than $250. Comparatively, these fees are not excessive and may permit borrowers to avoid endless debt cycles. (9-A MRS sec. 2-401(7))

Real APR in Maine can reach 217% for the average $300 payday loan (According to the Center for Responsible Lending 2019).

The Maximum Term for a Payday Loan in Maine

• Maine payday loan regulations mention nothing about specific loan terms and rollovers.
• Nothing is also mentioned about cooling-off periods between loans.
• There are no requirements for extended repayment plans either.

Consumer Information

Attention
From July 2020, lenders are not required to check a borrower’s ability to repay a loan.
Be careful, evaluate your financial situation, don’t get into a debt trap.
The rule was changed by the CFPB.

• All the criminal actions against borrowers are prohibited in the state of Maine.

In case of any payday loan issues and inquiries, customers can contact the Maine Office of Consumer Credit Regulation for more information.

Regulator: Complaints & Information

Maine Bureau of Consumer Credit Protection

Mailing Address: Department of Professional and Financial Regulation, 35 State House Station, Augusta, ME 04333
Address: 76 Northern Ave, Gardiner, ME 04345
Tel: 800-332-8529 (toll free) or 207-624-8527
Url: https://www.maine.gov/pfr/consumercredit/index.shtml
File a Complaint: https://www.maine.gov/pfr/consumercredit/complaint.htm

Submit a Complaint to the CFPB

Number of Maine Consumers Complaints by Topics

According to CFPB Consumer Complaint Database

• Charges from account ( 19 )
• Fraud and threat ( 16 )
• Not exiting debt ( 9 )
• Lender is not available ( 6 )
• Not requested loan ( 3 )
• Credit rating ( 2 )
• Loan not received ( 2 )
• Loan to return ( 1 )

The History of Payday Loans in Maine

• Mid-2000’s – There were certain national banks that made payday loans for several years. However, they stopped doing so after federal regulations were adopted.
• Since 2000s – Maine Consumer Credit Code (Rev. Stat. Ann. tit 9-A §1-201) has been regulating payday loan industry for years. The same laws apply as of April 2019.
• 2006 – The Military Lending Act effectively capped payday loans offered to the military at 36% APR. This federal law has no exceptions, thus, no lender in Maine is now allowed to offer loans to the military in excess of 36% APR.
• June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (expected in November 2020).
• 2017 – While the rule is not yet in place, payday lenders do not stop their attempt to broaden their limits in Maine and to find loopholes in the law. They tried to pass a bill that would authorize high-interest, long-term loans, and also to charge a new origination fee, and a new monthly maintenance fee. Unfortunately, the attempt was unsuccessful, and the situation in the industry stays the same at the moment.

[Updated As of February 2020]