HB 810 Consumer Finance Act Amendments
The North Carolina Consumer Finance Act lets non-bank lenders make installment loans of $10,000 or less. House Bill 810, Consumer Finance Act Amendments, as amended, would have:
- Increased the maximum loan size from $10,000 to 15,000,
- Increased the interest charged on these loans, which can already be as high as 54% annual interest,
- Added numerous new fees, and
- Continued to allow loan flipping and the sale of expensive add-on products.
We conservatively estimated that this bill would cost NC consumers $50 to $70 million in extra interest every year, plus tens of millions of dollars in additional fees. Since CitiFinancial and American General control two-thirds of the installment loan volume in NC, the bulk of these windfall profits would have flowed to these two lenders and the companies that own them -- Citi, AIG and a New York hedge fund.
This bill passed the House in early June, despite strong opposition from NC and national military leaders -- commanders at every military base in the state and the Department of Defense-- the NC Attorney General, the Governor, and dozens of NC allies including AARP NC, NC NAACP, the NC Justice Center, and Credit Counseling Agencies of NC. In addition, the NC Commissioner of Banks (NCCOB), the industry regulator, recommended no increase in rates and fees, after his careful study of the industry at the request of the General Assembly.
After passing the House by a narrow vote of 60 to 55, the bill received a cooler reception in the Senate, where it was referred to the Senate Rules Committee. The bill is eligible for consideration in the 2102 short session.
The finance companies’ champions in the House also had language included in the omnibus Studies Act of 2011, HB 773, that would have created a joint study commission on consumer finance loans under $3000.