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A bill to adjust North Carolina's Consumer Finance Act (H810) passed out of committee on a 15-6 vote yesterday. The vote, which came on last-minute notice on Wednesday evening, will increase the maximum loan amounts for short-term unsecured loans in the state. The bill also gives lenders the right to charge a 5 percent processing fee on all loans.
The bill has been the subject of a lot of press attention. There is a short report from Americans For Prosperity which summarizes some of the views held by the bill's supporters.Here is a study written by the North Carolina Credit and Personal Finance Council that defends the bill. Al Ripley, an attorney for the NC Justice Center, offers this retort.
A garrison commander from Fort Bragg, Col. Stephen Sicinski, has traveled to Raleigh to campaign against the
Montana may be the next state to force payday lenders out of their state. A broad cross-section of consumer advocacy groups are mobilizing on behalf of Initiative 164. I-164 is on the November ballot. It would cap interest rates on short-term loans at 36 percent.
The goal is to create a usury law that harms payday lending. While it would not make the practice illegal, a cap at that rate would likely cause payday lenders to close their shops in the state.
The Montana Consumer Finance Association and Bernard Harrington, treasurer for the Coalition for Consumer Choice Against I-164 petitioned the Montana Supreme Court to invalidate the ballot initiative. On August 18th, The Supreme Court voted 4-2 to turn down the request that would have either taken I-164 off the ballot, or rewritten the terms of its language.
Right now, payday lenders can charge $15 for a two-week loan of $100. In such an instance, a borrower writes a post-dated check for $115 and then is given a loan of $100. Underwriting is minimal. Lenders want to see that a borrower has a paycheck coming that will pay at least that much.
The new law would cap fees at $1.38 for $100.
The law would make credit far more affordable for borrowers. Such a loan would add a lot of flexibility to