Personal Loans in North Dakota: What Licensed Lenders May Charge

How the North Dakota cap works

The Money Brokers Act, NDCC chapter 13-04.1, defines money brokering as arranging or providing loans or leases as a form of financing, and applies when the borrower resides in North Dakota. Section 13-04.1-09.3 sets one flat limit for licensees: no finance charges above an annual rate of 36%, including charges incurred when the loan is made. The limit has no dollar threshold, so it reaches small and large loans alike.

Because origination charges count toward the 36%, a lender cannot keep the rate at the limit and add a large upfront fee on top. Look at the APR, not only the interest rate, and check the amount financed: a fee taken from the loan means you receive less than you borrow. The net proceeds calculator shows how much reaches you.

How North Dakota compares with its neighbors

On the National Consumer Law Center's comparison of a $2,000 two-year loan, North Dakota matches South Dakota and Montana at about 36%, while Minnesota allows about 33%. On a $10,000 five-year loan the gap is wider: North Dakota allows about 36%, Minnesota about 22%. The rules that apply follow the lender's license and your state of residence. The state rules map shows every state side by side.

Who needs a license and who does not

No one may engage in money brokering in North Dakota without a money broker license (NDCC 13-04.1-02). The test is where the borrower lives, so a lender based elsewhere that lends to North Dakota residents is covered. Helping an unlicensed business operate is itself prohibited, and violations are a class C felony, with civil penalties of up to $100,000 per occurrence.

• Banks, credit unions, savings and loan associations, trust companies and insurance companies are exempt (NDCC 13-04.1-02.1), and a bank may charge the rates its home state allows.
• Online lenders that partner with a bank may make loans through that bank, which can put the loan outside the 36% cap. Ask who the lender of record is.
• Payday lenders are licensed separately as deferred presentment service providers. Our sister site Lendmira covers them on its North Dakota lending laws page.

Fees and practices the law forbids

• No precomputed loans: a licensee may not make an agreement that is a precomputed loan, so interest runs on the actual balance and paying early saves interest.
• No advance fees from unlicensed brokers: only a licensee may take a fee before the loan is funded.
• No bait rates: a licensee may not advertise rates or terms that are not actually available, or use unfair or deceptive practices.
• Property insurance is limited to the replacement cost of the property, if the lender requires it.

A fee asked before funding is still a warning sign with any lender you have not checked. Our guide on how to verify a lender explains what to look up first.

Check a lender and file a complaint

1. 1 Confirm the license before you apply: ask the lender for its North Dakota money broker license and check it with the Department of Financial Institutions at 701-328-9933.
2. 2 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
3. 3 File a complaint against a licensed or chartered company at https://www.nd.gov/dfi/file-complaint.
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.

Questions people ask