North Carolina House Rejects New Class of LoansBy Danielle Mason
Payday Loan Writer
Raleigh, NC — North Carolina's 567 consumer finance outlets are currently competing against unregulated payday cash advance firms. However, the industry argues that they can't competete under the state's current lending rules because the interest and fees (max APR of 36%) fail to cover the cost of servicing small loans.
Industry supporters offered a bill that would allow these short term loans to charge up to 150% APR, compared to the unregulated payday loan industry which often charges between 500 - 600% APR. This new class of loan would be up to 18 months in term and $1,200 or less.
Consumer advocates reject this bill on the grounds of the APR and they had their victory Thursday when The House Finance Committee voted 9-17 against recommending the bill.
Supporters argued the proposed rules would have expanded opportunities for people without checking accounts to build up their credit while getting extra cash, unlike payday loans, which do not report to the three major credit bureaus.
Charlie Waters, chairman of South Carolina-based World Acceptance Corp., said after the meeting he doesn't know whether the industry will attempt to retool the bill to attempt to win passage. His firm has said without the changes, it couldn't profitably enter the North Carolina market.
"The vote was more emotional than based on good economic facts," he said.
March 5th, 2006 at 4:32 pm
[…] Another cousin of payday loans are the personal loans offered by consumer finance companies. They are not secured by property, and are available in relatively small amounts to people with credit problems. […]
March 12th, 2006 at 6:18 pm
[…] Celeste Collins, executive director of Consumer Credit Counseling Service of WNC, penned an editorial to The Citzen-Times this week. In it, she showed gratitude and happiness for the elimination of payday loans in North Carolina. To wit: At Consumer Credit Counseling Services, we’ve seen them: families on the verge of losing their homes because of fees spent renewing payday loans; parents afraid of arrest because they’re unable to pay off their balances; calls from low-wage employees whose jobs were in jeopardy because of unrelenting collection calls. […]