In Montana, a licensed installment lender can charge at most 36% a year. It must be licensed by the state even if it operates only online.

That rule comes from the Montana Consumer Loan Act, Title 32, Chapter 5 of the state code. The regulator is the Division of Banking and Financial Institutions (DBFI), part of the Department of Administration. If you are shopping for a small loan while also closing on a house, the cap matters. How the loan shows up in your mortgage file matters too.

How the 36% cap works

Under §32-5-301, a licensee may charge interest "not to exceed 36% a year." It may add only the charges the chapter authorizes. The DBFI FAQ says the ceiling covers all compensation, whether the lender labels it interest, fees or something else. A lender that overcharges fees must pay the borrower double the excess.

The repayment shape is regulated as well. §32-5-302 requires roughly equal installments, with an exception for borrowers with seasonal income. No installment may be substantially larger than the one before it.

Rule Montana Consumer Loan Act
Interest cap 36% a year (§32-5-301)
Late fee Greater of $15 or 5% of the past-due amount, max $50, once per late payment
First payment due Within 45 days of the loan
Single-payment loans Due in 45 days to 1 year
Loan amount No limit in the sources; a license is needed "in any amount"
Rollovers Not addressed in the sources for installment loans

Where Montana borrowers run into it

Online lenders. A company making or servicing loans to Montanans needs a Montana Consumer Loan License, issued through NMLS. It does not need an office in the state. Before you sign, search the lender's name at NMLS Consumer Access.

Payday alternatives. As of its consumer information page, DBFI says Montana has no licensed deferred deposit (payday) lenders. That leaves installment loans as the main regulated small-dollar product. The payday lending rules are covered separately.

Pending changes. In testimony before the Economic Affairs Interim Committee, DBFI Commissioner Melanie Hall previewed changes to the Consumer Loan Act for the 2027 session. They include a 10-day grace period before a payment counts as late, clearer disclosure of credit-life insurance costs, and crypto as collateral. None of these is law yet.

Not the same as the general usury cap

Montana's general usury limit in §31-1-107 covers ordinary private loans. It caps them at the greater of 15% or prime plus 6 points. That is not the rule for licensed consumer lenders, whose ceiling is 36%.

Banks and credit unions are another category. They are "regulated lenders," and §31-1-112 exempts them from all interest limits. Our sources do not say whether out-of-state lenders use bank partnerships or tribal status to reach Montanans above 36%. If an unlicensed lender quotes you more than 36%, report it to DBFI in writing. The division does not accept oral complaints.

Our sources also give no Montana figures on credit union small-dollar loans or state assistance programs. Ask your own credit union directly.

What an underwriter sees if you are buying a home

An installment loan taken mid-process shows up in more than one place. The deposit and the recurring payments appear on the bank statements you hand over. An underwriter will usually ask for a letter of explanation for a new debt or a large deposit. The monthly payment also counts in your debt-to-income ratio, which can shrink what you qualify for.

If you already have one, ask your loan officer before you act. Paying it off before you apply can remove the payment from the ratio, but how each lender treats a recent payoff varies. If you do not have one yet and closing is weeks away, this is usually the wrong time to take one out.