Ban on ayday loans in North Carolina

Payday lending business is illegal in North Carolina. This resolution was made in 2001. The lending legislation of North Carolina is considered to be the toughest to payday lenders in comparison with other States. Additionally, some amendments to the law have been passed recently, which deprived payday lenders of a chance to evade the law somehow and continue operating in this sphere. Actually, practically all the companies that were engaged in the business before have already left the lending market. Those who want to stay alive are required to get a license, correspond to the State legislative acts and offer loans under miserable interest rates.

However, the new law hasn’t influenced payday lenders that operate online. They declare that they are officially registered in the other State where payday loans are allowed but not in North Carolina, so that they can offer their loans to all American citizens, including the residents of North Carolina. But these statements contradict the law and borrowers shouldn’t be deceived by so-called lenders who just pretend to work legally. The State legislation concerns these online companies at the same extent as other local payday lenders. Customers who have found out that they are dealing with illegal and dishonest internet lenders can lodge a complaint against them to the court.

The Code of North Carolina provides that all lending companies of the State, no matter whether they are offering small or large, short-term or long-term loans, are required to charge not more than 36% for a loan per year. A lending firm that applies a higher annual percentage rate breaks the law of North Carolina.

The first law regulating payday lending industry was adopted in 1997. In 2001 a new legislative act replaced the old one. It paid special attention to the fact that activities of payday lenders are usury and can be very dangerous to a customer’s income. Percentage rates for payday loans were enormously high. Therefore, the State legislators decided to ban these loans. However, a lot of time is needed to eliminate all the payday lenders that are still providing their services to the customers of North Carolina. The situation has improved lately when the majority of the lenders were convicted for violating the law. A campaign under the name “Advance America” was executed in 2005. As a result, the remaining payday lenders closed their doors. At present there are no officially registered payday lending businesses in North Carolina. The operating companies have received a license and need to work as financial lenders and conform to the State legislation.

Payday lending companies usually make a fortune on customers with low or middle income who need urgent money by having emergency. These customers generally live from one paycheck to another, ask payday lenders for a help, and have enormous debts in the end. Most payday lenders earn huge money due to the high rates and charges that borrowers have to pay for payday loans. They don’t care about the budget of clients. Since the authorities of North Carolina are deeply concerned about the welfare of their citizens, they eliminated all payday lending services in the State.

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