State Lawmakers Look At Ways To Regulate Payday Lending
Posted October 1, 2002 9:54 a.m. EDT
RALEIGH, N.C. — An attempt by state lawmakers to regulate payday lending may not become law because the regulations would make the business unprofitable.
Payday lending is illegal in North Carolina. Some lenders use a loophole to stay in business and the practice is unregulated. In some cases, borrowers faced up to 400 percent interest rates on their loans and as a result, they are trapped in a cycle of debt.
"Over 90 percent of these loans are back-to-back-to-back transitions where the borrower can't pay it," said Richard Hatch, of the American Association of Retired Persons.
State lawmakers tried to regulate the industry with longer time to repay and a cap on interest rates.
"We say that there has to be limits for consumers. Four hundred percent is too much. Ninety percent is probably too much, but it seems to us a fair compromise," public interest advocate Rob Schofield said.
Rep. Phil Baddour, D-Goldsboro, said he believed that compromise may doom the passage of a payday lending bill.
"I think with the amendments that were adopted the industry is not happy with the bill, and it probably isn't time to work out a compromise," Baddour said.
"We hope they will pass something that will allow consumers to obtain small loans at a fair rate, but it's better to not pass anything than to pass something that has 400 percent loans because that is a recipe for disaster for a vast majority of the borrowers," Schofield said.
House leaders hope to wrap up the session by the end of the week, and the bill may fail to reach a vote before then.