Payday Loans and Cash Advance in North Carolina

Prohibited since 2001; 33% small-loan cap. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in North Carolina.

Is a Cash Advance Legal in North Carolina?

Payday loans are illegal in North Carolina. The state briefly allowed them under a 1997 check-cashing statute, G.S. 53-281, but the General Assembly let that law expire on August 31, 2001 rather than renew it, and North Carolina became the first state to end payday lending by sunset. Since then any loan of $25,000 or less made to a North Carolina consumer at more than the ordinary legal rate must be made by a lender licensed under the Consumer Finance Act, Article 15 of Chapter 53, which the Commissioner of Banks enforces. That Act allows 33 percent a year on the first $4,000 of a loan, 24 percent on the portion between $4,000 and $8,000 and 18 percent above that, repaid in at least 12 monthly installments. A two-week loan at $15 per $100 works out to about 391 percent, so no licensed lender can offer one. The Attorney General warns that payday lenders were shut down in North Carolina but still victimize borrowers online, with a $100 to $500 loan carrying 390 to 780 percent a year, and takes complaints at 1-877-5-NO-SCAM. The legal small-loan market here is installment credit at 33 percent or less.

The governing law is North Carolina Consumer Finance Act, G.S. Chapter 53, Article 15 (N.C. Gen. Stat. 53-164 to 53-191; rates and terms at 53-176; former Check Cashers Act payday authority, G.S. 53-281, expired August 31, 2001).

Loan Limits and Terms in North Carolina

The Consumer Finance Act is a licensing and rate statute for installment lenders, not a payday law. The tiers apply to the unpaid balance, so a $300 loan sits entirely in the 33 percent band. Loans must be scheduled over 12 to 96 monthly payments, which by itself rules out a two-week balloon loan. A licensee may add a processing fee of up to $30 on loans up to $3,000 and 1 percent of the amount financed above that, capped at $150, and may collect it no more than twice in 12 months. There is no database, cooling-off period or rollover rule because the product the rules would govern does not exist. Anything sold as a payday loan, cash advance on a check, or Internet loan at a triple-digit rate is outside the Act.

What a $300 Loan Costs in North Carolina

The cheapest legal small loan is a Consumer Finance Act loan at the top tier of 33 percent a year. Interest on $300 for 14 days at that rate is 300 x 0.33 x 14 / 365 = $3.80, so the payoff would be $303.80. Checking the APR the other way: 3.80 / 300 x 365 / 14 = 0.33, or 33 percent. A real Consumer Finance Act loan runs at least 12 monthly payments and may carry a processing fee of up to $30, which is why the two-week figure is a comparison, not a product.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in North Carolina

• No payday loan statute exists: the authority for check-based payday lending in G.S. 53-281 expired on August 31, 2001, and the General Assembly has not revived it (UNC School of Government).
• Lenders making loans of $25,000 or less to North Carolina consumers above the ordinary legal rate need a Consumer Finance Act license from the Commissioner of Banks and must stay within the 33, 24 and 18 percent tiers (NCCOB FAQ).
• Consumer Finance Act loans must be repaid over at least 12 and no more than 96 monthly payments, which makes a two-week balloon loan impossible under the license (Commissioner of Banks FAQ).
• The only added charge is a processing fee of up to $30 on loans up to $3,000, or 1 percent of the amount financed capped at $150 on larger loans, collected no more than twice in 12 months (NCCOB FAQ).
• The Attorney General Consumer Protection Division takes payday loan complaints at 1-877-5-NO-SCAM (877-566-7226) and has pursued out-of-state and online payday lenders that target North Carolina residents.
• The Commissioner of Banks accepts consumer inquiries and complaints online and by phone at 919-733-3016 against the consumer finance companies it licenses.

Complaints and licence checks go to the North Carolina Office of the Commissioner of Banks: 919-733-3016, nccob.nc.gov, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in North Carolina

There are no legal payday storefronts in North Carolina, so every payday offer a resident sees today is online, and the Attorney General has a page devoted to exactly that: Payday Lenders, shut down in North Carolina but still victimizing borrowers online. The office warns that Internet payday loans bring more trouble than the old storefront loans because the lender takes direct access to your bank account and the collectors may be unlicensed or overseas, which makes harassment harder to stop. It puts the cost of a $100 to $500 online payday loan at 390 to 780 percent a year. Those lenders usually claim to be based in another state or on tribal land, but a loan made to a North Carolina resident must follow North Carolina law. Anyone who has taken such a loan is asked to call 1-877-5-NO-SCAM. The Commissioner of Banks handles complaints about licensed consumer finance companies, and its online complaint page is the place for problems with an installment lender that does hold a license.

Alternatives If a Payday Loan Is Not the Right Fit

The legal small-loan product in North Carolina is an installment loan from a consumer finance company licensed by the Commissioner of Banks, priced at no more than 33 percent a year on the first $4,000 and repaid over 12 months or more. Banks and credit unions make personal loans below that ceiling, and federal credit unions offer Payday Alternative Loans, a small-dollar product with a capped rate and a small application fee for members; the state credit union network is one of the largest in the country. Non-loan options include an advance on wages from your employer, an overdraft line at your bank, a payment plan with the utility, landlord or clinic you owe, and local emergency assistance through county social services. If you already have an online payday loan, the Attorney General advice is to report it rather than keep paying, and to talk to your bank about stopping automatic debits.

Compare the installment loan and payday alternative loan options before you decide.

Cities We Cover in North Carolina

• Charlotte, NCLocal cost of living, ordinances and help lines
• Concord, NCLocal cost of living, ordinances and help lines
• Durham, NCLocal cost of living, ordinances and help lines
• Fayetteville, NCLocal cost of living, ordinances and help lines
• High Point, NCLocal cost of living, ordinances and help lines
• Winston-Salem, NCLocal cost of living, ordinances and help lines

Frequently Asked Questions

Nearby States

• VirginiaThe fee cap, a worked example and the regulator to call in Virginia.
• TennesseeThe fee cap, a worked example and the regulator to call in Tennessee.
• GeorgiaThe fee cap, a worked example and the regulator to call in Georgia.
• South CarolinaThe fee cap, a worked example and the regulator to call in South Carolina.