Today in North Carolina payday loans are illegal. It is against state statutes to charge interest rates that exceed a 36% APR.
State regulators went to battle with payday lenders from 2005-2006. Attorney General Roy Cooper obtained consent agreements in March 2006 from Check Into Cash, Check ‘n Go and First American Cash Advance, who each agreed to stop issuing loans with interest rates above the 36% annual usury limit.
North Carolina used to have dozens of payday loan companies operating out of low income neighborhoods shut out by traditional lenders. They exploited the poor who were desperate to find money to keep their power on or for other emergency needs. Most did not understand the consequences of agreeing to loans with fees so high that the annual interest exceeded 700% in some cases.
No loan is worth that amount. Especially when there are so many alternatives that are available that carry much more favorable terms.
Payday Loan Alternatives in North Carolina
If the average payday loan customer knew how much cheaper they could qualify for loans, they would have never gone to a payday loan company to begin with. Instead, they would have focused on one of the more favorable alternatives.
One such alternative is a payday loan product that State Employees’ Credit Union created in 2001. They did this to provide a cost effective alternative to commercial payday loans for their members.
SECU’s payday loan charges only 12% APR. On a maximum loan amount of $500, that equates to about five bucks a month. Additionally, SECU’s payday loan product contains a savings component. During repayment of the loan, 5% of the loan proceeds are deposited into the member’s savings account. The purpose of this savings feature is to allow the member to save enough money over a few months to totally wean themselves away from the loan completely.
SECU membership is limited to state employees, their family members and those who live in the same household. If you are not eligible for membership, you should consider one of the many other credit unions available in North Carolina, many of which have membership requirements that you may meet.
A loan against your vehicle is an alternative to a payday loan. It can be useful as long as you are not at risk of defaulting on the loan. The loan must be obtained through a responsible lender, such as a credit union, community bank or national bank. Title loans work the same way, but the interest rates are much too high too be a realistic option.
A finance company may be able to provide you with a loan. While much more reasonable than a payday lender, finance company interest rates can still be as high as 18-25%. In situations of extremely poor credit, the rates can be even higher. An occasional finance company loan may be reasonable for some situations, but you should consider that relying too much on finance companies to get you through frequent economic hardships is dangerous. Credit bureaus also penalize you if you have too many consumer finance company accounts.
If you frequently find yourself unable to pay your bills, it might be time to undergo credit counseling. In North Carolina debt consolidation services are available to those who complete credit and debt counseling. Instead of taking on more debt, it might be time to consider ways to manage your debt and find a way to fit a lower payment into your current budget.
Any pne of these options are an alternative to the oppressive payday loans that are no longer legal in North Carolina. Of course, if you are bound and determine to ruin your finances, feel free to obtain one of the online payday loans offered by predatory lenders eager to break the law to take your money. They will surely help you reach financial ruin!
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."