This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
MICHIGAN STATUTORY INTEREST RATE CEILINGS
References herein are to the Michigan Compiled Laws of 1970 (MCL) available on the Michigan Legislature website, www.legislature.mi.gov.
In addition to the state laws mentioned below, a bank, savings bank, or credit union is authorized by the Depository Institutions Deregulation
and Monetary Control Act of 1980 (DIDMCA), 12 USC 1735f-7a, to charge the greater of 1 percentage point in excess of the Federal Reserve
discount rate or the highest rate permitted by state law to any lender on the type of loan in question (the most favored lender authority).
DIDMCA also preempts state usury ceilings by allowing any rate of interest for virtually all first lien mortgages and mobile home loans as well as
first lien mobile home installment contracts. Moreover, under DIDMCA, an individual selling his or her home and taking a first lien on the title or
a land contract given in exchange for the sale of unencumbered property could be at any rate of interest. The states had the authority to
override the federal preemption of the first lien mortgages and mobile home loans but had to act before April 1, 1983. The state of Michigan did
not act before the deadline. Regarding other loans, states may override the preemption at any time. DIDMCA, as amended, also preempted
certain state usury ceilings applicable to business and agricultural loans. The preemption expired on April 1, 1983.
Further, Title VIII of the Garn-St. Germain Depository Institutions Act of 1982, PL 97-320, entitled “Alternative Mortgage Transaction Parity Act of
1982,”(AMPTA), 12 USC 3801 et seq., authorizes state-chartered banks, credit unions, savings banks, and other housing creditors (including
licensees under the Mortgage Brokers, Lenders and Servicers Licensing Act, MCL 445.1651 et seq., and the Secondary Mortgage Loan Act, MCL
493.51 et seq.) to make alternative mortgage transactions notwithstanding any provisions of state law which restrict or prohibit the making of
such transactions. States had the authority to override the federal preemption but had to act before October 15, 1985. The state of Michigan did
not act before the deadline. Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 12 USC
5301 et seq., amended AMTPA to narrow the scope of federal preemption.
The following table is divided into two parts. The first part primarily applies to extensions of credit which, with two exceptions, are made
exclusively by, “regulated lenders,” as defined under the Credit Reform Act (CRA), MCL 445.1851, et seq. The two exceptions are: 1) real estate
mortgages and land contracts by all types of lenders and vendors (some not subject to the CRA) and 2) business loans made by all types of
lenders (some not subject to the CRA). The second part of the table covers extensions of credit by lenders which are not permitted to extend
credit under the CRA. Among the lenders appearing in this part of the table, are licensees under the Credit Card Act (CCA), MCL 493.101 et seq.
Although the CRA includes licensees under the CCA in the definition of “regulated lenders,” CCA licensees cannot exercise powers under the CRA
because they remain subject to specific and controlling provisions contained in the CCA.
This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
“Business loans,” as used in this schedule, includes agricultural loans. Variable Interest rate loans are allowed unless otherwise indicated.
PART I.
LENDERS SUBJECT TO CREDIT REFORM ACT,
MORTGAGE LOANS, AND BUSINESS CREDIT EXTENSIONS
LOAN CATEGORY
LEGAL
CITATION
MAXIMUM CONTRACT
RATE (SIMPLE INTEREST
UNLESS INDICATED
OTHERWISE)
OTHER TERMS LATE CHARGE
1. Mortgages, Land Contracts
a. Conventional first lien or land contract
by a regulated lender under CRA and a
licensee/registrant under the MBLSLA
1
,
except as in 1c.
2
MCL 438.31c
3
25% per annum
Reasonable loan processing
fee by contract.
Reasonable late
charge by contract.
b. Conventional first lien or land contract
by unregulated lender, except as in 1c.
MCL 438.31c
4
11% per annum
Loan processing fee not
permitted; variable rates not
permitted for some lenders.
Reasonable late
charge by contract.
c. Loan or land contract in excess of
$100,000 secured by first or junior lien
on other than single-family dwelling.
MCL 438.31c
No ceiling
Reasonable loan processing
fee by contract for regulated
lenders.
Reasonable late
charge by contract.
1
MBLSLA is the Mortgage Brokers, Lenders, and Servicers Licensing Act, MCL 445.1651 et seq.
2
FHA/VA loans are exempted from the Michigan Usury Law by MCL 438.31 and MCL 487.751
3
DIDMCA allows any rate of interest.
4
DIDMCA allows person selling his/her principal residence, on which there is no prior lien, by first mortgage or land contract to charge any rate.
This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
d. Loan secured by junior lien, except as
in 1c, 1d(ii), 2a, and 2b.
i. By bank
MCL 445.1854,
MCL 445.1857
25% per annum
All fees and charges as
agreed to by borrower.
Late fee as agreed to
by borrower.
ii. By savings bank (includes certain
business loans secured by junior
liens.)
MCL 445.1854,
MCL 445.1857
25% per annum
All fees and charges as
agreed to by borrower.
Late fee as agreed to
by borrower.
iii. By credit unions
MCL 445.1854,
MCL 445.1857
25% per annum
All fees and charges as
agreed to by borrower.
Late fee as agreed to
by borrower.
iv. By secondary mortgage licensees
(loans may be secured by 1-4 family
dwelling)
MCL 493.71,
MCL 493.72,
MCL 445.1854,
MCL 445.1856
25% per annum
Loan processing fee not to
exceed 5% of the gross
amount of the loan; prepaid
finance charge allowed to
buy down interest rate;
reasonable annual fee on
open-end credit.
Greater of $15.00 or
5% of the installment
payment.
v. By unlicensed person who is selling
home, or a builder (loans may be
secured by 1-4 family dwelling)
MCL 438.31c,
MCL 493.80,
MCL 493.52
11% per annum
Limited: two loans per year;
loan processing fee not
permitted.
Reasonable late
charge by contract.
vi. Realtor representing buyer or self
MCL 438.31c,
MCL 493.52
11% per annum
Limited: two loans per year;
loan processing fee not
permitted.
Reasonable late
charge by contract
vii. Other unlicensed person
MCL 438.31,
MCL 493.52
7% per annum
Limit: two loans per year;
loan processing fee not
permitted
Reasonable late
charge by contract.
This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
2. Business Loans
a. Loan to unincorporated borrower
i. By depository financial institution
insurance company, finance
subsidiary of manufacturer, or a
related entity (includes business
purpose loan secured by junior lien,
except as in 1c)
MCL 438.61
5
,
MCL 438.31a,
MCL 445.1854
25% per annum
Reasonable loan processing
fee by contract for regulated
lenders; Must have sworn
statement of business
purpose if borrower is a
natural person
Reasonable late
charge by contract.
ii. By other lender, except as in 1b and
1c
MCL 438.61,
MCL 438.41
25% per annum
Must have sworn statement
of business purpose if
borrower is a natural person;
loan processing fee not
permitted for certain
unregulated lenders.
Reasonable late
charge by contract.
b. Loan or other credit extension to a
corporation or limited partnership
from any source, except as in 1c
MCL 450.1275,
MCL 449.1109,
MCL 438.41
No ceiling, as long as
agreement is in writing
Reasonable loan processing
fee by contract.
Reasonable late
charge by contract
c. Regulated lenders, as defined under
MCL 445.1852
6
may make business
loans to the extent authorized by law,
except as in 1c
MCL 445.1854,
MCL 445.1856
No ceiling, as long as
agreement is in writing
Processing fee of 2% of
amount of loan.
Greater of $15.00 or
5% of the installment
payment.
3. Credit card, auto, and other types of
loans
5
DIDMCA indicates that credit unions and savings banks may charge the rate allowed for business loans by banks.
6
Pursuant to MCL 445.1852, “regulated lender” means a depository institution, a licensee under the consumer financial services act, Act No. 161 of the Public Acts of 1988, being sections 487.2051 to
487.2072 of the Michigan Compiled Laws, Act No. 379 of the Public Acts of 1984, being sections 493.101 to 493.114 of the Michigan Compiled Laws, the motor vehicle sales finance act, Act No. 27 of
the Public Acts of the Extra Session of 1950, Act No. 125 of the Public Acts of 1981, being sections 493.51 to 493.81 of the Michigan Compiled Laws, or the regulatory loan act of 1963, Act No. 21 of
the Public Acts of 1939, being sections 493.1 to 493.26 of the Michigan Compiled Laws, or a seller under the home improvement finance act, Act No. 332 of the Public Acts of 1965.
This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
a. Credit card or line of credit agreement
by a depository financial institution
MCL 445.1854,
MCL 445.1857
No ceiling
7
All fees and charges as
agreed to by borrower.
Late charge as
agreed to by
borrower.
b. All other types of loans by depository
institutions except as in 1a and 1c
MCL 445.1854,
MCL 445.1857
25% per annum
8
All fees and charges as
agreed to by borrower.
Late charge as
agreed to by
borrower.
4. Loans by regulatory loan licensees
MCL 445.1854,
MCL 445.1856,
MCL 493.13
25% per annum
Processing fee of 5% of
amount of loan up to
$300.00.
9
As permitted by CRA
5. Auto financing by licensed auto dealers
MCL 445.1854,
MCL 445.1856,
MCL 492.113,
MCL 492.118
25% per annum
Processing fee not
permitted; documentary
preparation fee up 5% of
cash price or $210.00,
whichever is less.
10
As permitted by CRA
6. Unsecured loans by unlicensed entity
MCL 438.31
5% without written
contract; 7% with written
contract
All fees and charges as
agreed to by borrower.
Late charge as
agreed to by
borrower.
7
Pursuant to MCL 487.14201, a bank is authorized to collect interest and charges on loans and extensions of credit as permitted by the laws of this state or of the United States to any lender. A bank,
on a credit card loan, can charge the interest rate and fees allowed to a regulated lender under the CRA. Pursuant to MCL 487.3430, a savings bank is authorized to collect interest and charges on a
credit card loan as permitted by the CRA. A credit union is authorized on a credit card loan to charge the rate of interest allowed by the CRA. Also, as a result of the federal most favored lender
authority, a federally insured state or national bank, state or federal savings bank, or state credit union, can charge the highest rate of interest allowed under Michigan law to any lender on the type
of loan in question.
8
May charge rate authorized under MCL 445.1854 or 1% plus Federal Reserve Discount.
9
The documentary preparation fee is adjusted every two years to reflect the cumulative percentage change in the consumer price index for the two immediately preceding calendar years. Please see
the applicable bulletin for the permitted documentary preparation fee. Fee of $300.00 is permitted under Bulletin 2018-01-CF and is subject to change every two years.
10
The documentary preparation fee is adjusted every two years to reflect the cumulative percentage change in the consumer price index for the two immediately preceding calendar years. Please see
the applicable bulletin for the permitted documentary preparation fee. Fee of $210.00 is permitted under Bulletin 2017-02-CF and is subject to change every two years.
This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
PART 2.
CREDITORS REGULATED BUT NOT SUBJECT TO THE CREDIT REFORM ACT
LOAN CATEGORY
LEGAL
CITATION
MAXIMUM CONTRACT
RATE (SIMPLE INTEREST
UNLESS INDICATED
OTHERWISE)
OTHER TERMS LATE CHARGE
1. Loans by non-depository credit card
licensees
MCL 493.110
1.5% per month (18% per
annum) on the unpaid
balance.
Loan processing fee not
permitted; annual fee is
permitted.
Not permitted.
2. Financed insurance premiums
MCL 500.1509,
MCL 500.1510
$12 per $100 plus $18 per
contract on premiums of
$100 or more; $15 on
premiums less than $100
paid in 1-3 installments;
$17 on premiums less than
$100 paid in 4 or 5
installments.
Add-on interest only; $18
charge need not be refunded
upon cancellation or pre-
payment.
Delinquency charge of
$1 to a maximum of 5%
payment not to exceed
$5 per installment in
default 10 days or more.
