Printer-friendly: Click to view
  • Summary date: Jun 27 2023 - View Summary

    AN ACT TO AMEND THE NORTH CAROLINA CONSUMER FINANCE ACT. SL 2023-61. Enacted June 27, 2023. Effective October 1, 2023.

  • Summary date: Jun 19 2023 - View Summary

    The Governor vetoed the act on June 19, 2023. The Governor's objections and veto message are available here:


  • Summary date: Apr 4 2023 - View Summary

    Senate committee substitute to the 1st edition makes the following changes. 

    Makes the following further changes to Article 15, the North Carolina Consumer Finance Act, in GS Chapter 53. 

    Amends GS 55-173(b) (pertaining to computation of interest) to specify that the interest on loans made under the section will not be compounded but computed and paid only as a percentage of the unpaid portion of the amount financed, in addition to other statutory directive on calculation of interest (was, calculated as a percentage of the amount financed in addition to other statutory directive).

    Amends GS 55-176 (pertaining to rates, maturities and amounts) to change the interest rate on loans not exceeding $12,000 from 36% to 33% on the part of the balance not exceeding $4,000. Specifies that interest will be contracted for and collected at the applicable simple interest rate applied to the unpaid portion of the amount financed (was, just the amount financed). Amends GS 55-176(b) to cap the 1% fee of amount financed exclusive of the loan processing fee charged for loan amounts in excess of $3,000 at $150 (was, just 1% fee of amount financed exclusive of the loan processing fee).

    Deletes proposed new GS 53-176.2 (pertaining to inflation adjustment for loan amounts and certain loan fees).  Amends  GS 53-177 (pertaining to fees) to reduce the cap on late fees from $20 to $18. 



  • Summary date: Mar 20 2023 - View Summary

    Makes the following changes to Article 15, the North Carolina Consumer Finance Act, in GS Chapter 53. 

    Amends the definitions that apply to the Article as follows. Defines amount financed as the amount of cash or its equivalent the borrower actually receives or is paid out at the borrower's discretion or on the borrower's behalf, including the charges authorized by GS 53-173 (concerning computation of loan interest; application of payments; limitation on interest after judgment; limitation on interest after maturity of the loan), GS 53-176 (concerning installment loan rates, maturities and amounts), GS 53-177(a) (recording fees) and (d) (fee for nonfiling or nonrecording insurance policy), GS 53-177.1 (electronic transaction fees), and GS 53-189 (premium or cost of credit life, credit accident and health, credit unemployment, or credit property insurance). Specifies that the term includes: (1) fees and charges prescribed by law that actually are or will be paid by a licensee for determining the existence of or for perfecting, releasing, or satisfying a security interest related to a loan under this Article, and (2) premiums payable for insurance in lieu of perfecting a security interest otherwise required by a licensee in connection with a loan under this Article if the premium does not exceed the fees and charges described above that would otherwise be payable. Defines electronic payment as an electronic or digital means of transferring funds as an alternative to a cash payment; specifies that the term includes a payment using an automated clearing house (ACH) transaction, a credit or debit card, a mobile wallet, a unified payments interface (UPI), internet banking, or mobile banking. Replaces the term "amount of the loan" with loan amount, defined as the aggregate of the amount financed and all charges authorized by this Article. Defines servicing loans as receiving any scheduled periodic payments from a borrower regarding a loan made pursuant to this Article and making the payments to the owner of the loan or another third party. Deletes the term "cash advance." Amends the numbering of the statute's subsection. Amends GS 53C-1-4 by making a conforming change to the statutory cross-reference to GS 53-165.

    Amends GS 53-166 to require a license to lend or service a loan in an amount of $25,000 or less (was, lending in amounts of $15,000 or less), and contract for, exact or receive, on or in connection with the loan, any charges that in the aggregate are greater than permitted by GS Chapter 24 (Interest), excepted as provided for in this Article. The statute specifies that the licensing requirements apply to any person seeking to avoid its application by any device, subterfuge, or pretense; amends what is considered to be such avoidance to include transactions in which a cash rebate or other advance of funds is offered and (1) the cash rebate or other advance of funds (was, cash advance) is made contemporaneously with the transaction or soon thereafter; (2) the amount of the rebate or other advance of funds (was, cash advance) is required to be repaid at a later date; and (3) the selling or providing of any item, service, or commodity with the transaction is incidental to, or a pretext for, the advance of funds. Prohibits a licensee servicing a loan that violates the Article from collecting, receiving, or retaining any principal or charges with respect to the loan.

    Amends GS 52-167 by increasing the amount of the minimum annual assessment that a consumer finance licensee must pay from $500 to $1,000.

    Amends GS 53-186 by increasing the amount of the license application fee from $250 to $500 and requires it be paid to the Office of the Commissioner of Banks (Commissioner) instead of the Banking Department. Adds the requirement that a licensee give the Commissioner notice of the proposed transfer or assignment of a license not less than 30 days before the date the transaction is set to close, and the Commissioner must promptly render a decision. Adds the requirement to report to the Commissioner the purchase of a loan made under this Article by an existing licensee; requires the report to be made within 30 days after completing the transaction. Allows a license to be posted on the licensee's website in lieu of at the place of business.

    Amends GS 53-170 to require the statement of a change in location, ownership, or management be filed within 90 days of the change.

    Amends GS 53-171 by removing the requirement that a licensee who fails to make any loans during any period of 90 consecutive days must surrender their license.

    Amends GS 53-172, which prohibits licensees from conducting the business of making loans within any place of business in which any other business is solicited or transacted, by adding the collection of loans legally made in North Carolina under GS Chapter 24 (Interest) and Chapter 25A (Retail Installment Sales Act) to those that are not considered as being any other business for purposes of the statute.

    Amends GS 53-173 to now require that loan interest be computed: (1) and paid only as a percentage of the amount financed (was, of the unpaid principal balance or portion thereof) and (2) on the basis of the number of days actually elapsed; however, if part or all of the consideration is the unpaid principal balance of a prior loan, then the amount financed (was, the principal amount payable) under the loan contract may include any unpaid interest on the prior loan that has accrued within 90 days before making the new loan contract.

    Amends GS 53-176 by increasing the cap on the amount of installment loans that licensees may make from $15,000 to $25,000. Amends the cap on the interest that can be charged on these loans so that it is now not to exceed the following: (1) 36% per annum (was, 30%) with respect to a loan with a loan amount at origination not exceeding $12,000 (was, with respect to a loan not exceeding $10,000) on that part of the unpaid principal balance not exceeding $4,000, with the rate decreasing as previously specified and (2) 18% per annum with respect to a loan with a loan amount at origination exceeding $12,000 (was, loan exceeding $10,000). Requires interest to be contracted for and collected at the applicable simple interest rate applied to the amount financed (was, at the simple interest rate applied to the outstanding balance that would earn the same amount of interest as the above rates for payment according to schedule). Increases the cap on the allowed closing fee from $25 or loans up to $2,000, to $30 for loan amounts up to $3,000 and 1% of the amount financed, exclusive of the loan processing fee, for loan amounts more than $3,000 (was, 1% of the cash advance for loans above $2,500, not to exceed a total fee of $40).

    Enacts new GS 53-176.2, providing as follows. Specifies that for the purposes of this statute, CPI-U means the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor; the CPI-U for calendar year 2023 is the Reference Base Index. Requires the Commissioner to annually, beginning on January 1, 2024, adjust the dollar amount for the loan amounts established in GS 53-176, the non-percentage-based loan processing fee allowed in GS 53-176(b), and the late payment fee allowed in GS 53-177(b) based on the annual percentage change in CPI-U reported on the preceding June 1. Sets out additional requirements for when the changes become effective and for rounding the new amounts. Requires publishing the adjusted loan amount categories and loan fees and the formula by which the adjustments were calculated on the Commissioner's website. Also requires providing notice to licensees of the adjustments, publishing the adjustments in the North Carolina Register, and notifying the Revisor of Statutes, who must adjust the amounts in the General Statutes.

    Amends GS 53-177 as follows. Increases the cap on the late fee that a licensee may charge from $15 to $20. Allows a licensee to apply a borrower's most recent payment to the oldest installment due. Prohibits collecting more than one late payment fee from any full or partial payment made toward a particular scheduled installment payment; allows collecting more than one late payment fee from any payment made toward more than one installment payment if the number of late payment fees collected does not exceed the number of different installment payments that were past due for 10 days or more and to which the payment was applied. Provides that if a licensee declares a borrower in default and accelerates a loan, the licensee is allowed to collect a late payment fee for each installment payment that was, as of the date of acceleration, past due for 10 days or more; prohibits collecting a late payment fee for any installment that becomes due solely because the licensee has declared a borrower in default and accelerated a loan. Allows a licensee who refinances a loan to include in the amount financed late payment fees for each installment payment that was, as of the date of the refinancing, past due for 10 days or more. Provides that when a loan reaches maturity, a licensee may include in the final balance owed a late payment fee for each installment payment that remains past due for 10 days or more. Adds that a licensee may assess a deferral charge for each month of the remaining loan term on each installment owed after the date of deferral. Also allows a licensee to charge a late payment fee on deferred payments that remain past due for 10 days or more after the agreed upon due date; specifies that a deferral does not alter the maturity date of the loan contract, even if a payment is deferred beyond maturity. 

    Amends GS 53-180 by providing that an assignment of earnings in violation of the statute is unenforceable (was, unenforceable by the assignee of the earnings and is revocable by the borrower).

    Amends GS 53-181 as follows. Allows the statement that must be given to the borrower to be made available electronically. Amends the required content of the statement as follows: (1) requires including the loan amount (was, cash advance); (2) no longer requires including the face amount of the note evidencing the loan; and (3) requires the inclusion of the following statement: "This loan is regulated by the provisions of the North Carolina Consumer Finance Act, Article 15 of Chapter 53 of the North Carolina General Statutes." No longer requires licensees to make available to the borrower at each of the licensees' places of business a schedule of charges and insurance premiums on all classes of loans currently being made by such licensee, and no longer requires that a copy be filed with the Commissioner. 

    Amends GS 53-182 to provide that a receipt of a payment made on a loan is not required for electronic payments. Allows the documents that are due to the borrower upon payment of a loan in full to be made available electronically.

    Amends GS 53-184, as follows. Limits who has access to a licensee's books and records to the Commissioner and the Commissioner's agent (was, also the Commissioner's deputy or duly authorized examiner). Adds the requirement that a licensee maintain separate loan ledgers and accounts related to the making and collecting of loans under this Article. Requires the allocation of expenses to be made monthly. Requires keeping all books and records required by this statute for two years after the last transaction consistent with the Federal Trade Commission Safeguards Rule. Sets out the books and records to be kept as the following, with the required content described: general ledger, loan documents, judgments, and repossessions. 

    Amends GS 53-190 to prohibit the enforcement in North Carolina of a loan contract made outside the state in the amount or of the value of $25,000 (was, $15,000) or less, for which greater consideration or charges than those allowed under the specified statutes have been charged, contracted for, or received. Makes conforming changes.

    Makes additional clarifying and technical changes throughout the Article.

    Applies to contracts entered into, modified, or renewed on or after October 1, 2023.