Advocates for consumers and Navy-Marine Corps Relief Society oppose legislation increasing rates and fees on consumer finance loans
Legislation to be heard Thursday would allow lenders to charge even more than the 54 percent APR already allowed under NC law
RALEIGH (April 20, 2011) –- A group of North Carolina organizations representing consumers are joining with the Military Aid Society serving the Navy and Marine Corps to oppose a new push to make consumer loans more expensive in North Carolina.
Legislation before the NC General Assembly would increase rates and fees on small consumer finance loans that can already reach as high as 54 percent. House Bill 810 would allow consumer finance companies and big out-of-state lenders like CitiFinancial and American General to charge new fees and even higher rates for loans to consumers.
“Making loans more expensive at a time when North Carolinians are struggling to make ends meet is wrong for the economy and wrong for North Carolina,” said Chris Kukla, Senior Counsel for Government Affairs at the Center for Responsible Lending. “The vast majority of lenders are profitable right now, while consumers continue to struggle paying loans that already carry a high rate of interest.”
The bill is scheduled to be heard Thursday in House Banking room 425 in the Legislative Office Building. Senate Bill 761 is the Senate companion bill.
The consumer loan market is dominated by six big out-of-state companies that control 80 percent of the lending in North Carolina – including CitiFinancial and American General (owned by AIG and a NY hedge fund). Many major statewide groups oppose this bill, including AARP NC, NC NAACP, NC AFL-CIO, NC Justice Center, the Center for Responsible Lending, the Credit Counseling Agencies of NC and other members of the Coalition for Responsible Lending, a collection of organizations which represents more than 3 million North Carolinians.
The coalition is joined in its opposition to the legislation by the Navy-Marine Corps Relief Society.
“We are very concerned about any legislation that increases rates and fees on consumer finance loans,” said Retired Admiral Steve Abbot, President of the Navy-Marine Corps Relief Society, whose mission is to provide, in partnership with the Navy and Marine Corps, financial, educational, and other assistance to members of the Naval Services of the United States. “Many high cost lenders target military personnel and families. It’s a disservice to those protecting our freedoms to be burdened with high interest debt that can create unnecessary hardships for them and their families.”
“This legislation will increase the already high interest rates and fees charged on consumer finance loans in North Carolina. We believe these changes would be harmful to Sailors, Marines and their families struggling to make ends meet in this difficult economy.”
“The society’s opposition to the legislation is a further indication of how harmful these loans can be, not only to military personnel and their families but to all consumers struggling to survive in this devastating economy” said Al Ripley, Director of Consumer Affairs at the NC Justice Center. “This issue has been studied exhaustively and there is no reason to increase rates and fees on these loans.”
The NC Commissioner of Banks in February released a report which determined that the consumer finance industry has been profitable over the past five years and recommended that no changes be made to the law.