Personal Loans in Montana: What Licensed Lenders May Charge

How the Montana 36% cap works

Section 32-5-301 is short and strict. A licensee may charge interest, but the interest may not exceed 36% a year. The fees for a deferral or a past-due payment are counted outside that 36%, and no other fees or charges may be contracted for or received except those the chapter authorizes. A licensee may not split one loan into several contracts to get around the limits.

If a licensee collects more than the law allows, it must forfeit to you double the excess amount. Because third-party costs and credit insurance can be added to the principal, compare the amount financed and the APR on your Truth in Lending disclosure, not only the rate.

At the cap, the cost adds up quickly on a longer loan. A $2,000 loan at 36% repaid in 24 monthly payments costs $118.09 a month, with $834.16 in interest. A $10,000 loan at 36% over 60 months costs $361.33 a month, and the interest, $11,679.80, is more than the amount borrowed. These are worked examples, not offers; the loan term calculator shows how a shorter term changes the total.

How Montana compares with its neighbors

On the National Consumer Law Center's comparison of a $2,000 two-year loan, North Dakota and South Dakota also sit at 36% and Wyoming at about 31%, while Idaho has no numeric cap beyond an unconscionability standard. Your state of residence and the lender's license decide which rules apply. The state rules map shows every state side by side.

Who needs a license and who does not

Section 32-5-103 bars anyone from making consumer loans, or collecting payments on them, except as the Consumer Loan Act allows. The rule reaches anyone who tries to avoid it by any device, subterfuge or pretense, and a loan made by an unlicensed lender that is not exempt is void: the lender may not collect or keep any principal, interest or fees. Companies that service loans made under the Act must also be licensed to collect them.

• Banks, savings associations, trust companies and credit unions are exempt from the chapter. An out-of-state bank may charge the rates its home state allows.
• Occasional private lenders who make fewer than four consumer loans a year with their own money are also exempt if they do not hold themselves out as licensees.
• Online lenders that partner with a bank may lend through the bank. Ask who the lender of record is.
• Payday and title loans are covered by our sister site Lendmira on its Montana lending laws page.

Check a lender and file a complaint

1. 1 Look up the license in NMLS Consumer Access; the Division of Banking and Financial Institutions does all of its licensing through NMLS.
2. 2 Contact the lender first by letter or phone, and keep the Truth in Lending disclosure, the agreement and any messages about fees.
3. 3 File a written complaint with the Division using its complaint form, sent by email, mail or fax. Oral complaints are not accepted.
4. 4 Send a complaint to the CFPB as well if the lender is a bank or a bank partner, or if you are unsure who regulates it.

A request for a fee before approval or funding is a warning sign. How to verify a lender lists the other checks, and if you are denied covers what to do next.

Questions people ask