North Carolina has extracted agreements from three additional lenders to stop making payday loans, which are illegal in the state. State Attorney General Roy Cooper said the agreements mean that payday lending practices by all major companies operating in the state have now ended.
"We've fought payday lending at every turn and we're putting this industry out of business here in North Carolina," Cooper said.
"These payday lenders thought that they had found a way around North Carolina law. Now we're showing them the way out of our state," he said.
So-called "payday" loans are targeted at low income consumers, often struggling to make ends meet. Cooper says the lenders took advantage of their desperate circumstances to saddle them with outrageous terms.
For example, consumers who took out a typical payday loan of $300 from one of the three companies were required to repay the loan within two weeks, plus around $60 in interest. That amounts to an annual percentage rate of 400 percent.
Consumers who couldn't repay the loan at the end of two weeks were required to take out another payday loan to repay the first.
Under the consent agreements, Check Into Cash, Check n Go and First American Cash Advance will stop making payday and other unauthorized loans in North Carolina.
Cooper said the companies will not only stop collecting interest and other fees on existing loans, but will pay a total of $700,000 to find efforts to help consumers adversely impacted by payday loans.
The money will go to several non-profit groups that provide credit counseling and financial literacy training.
Cooper said two of the firms plan to close down operations in North Carolina and leave the state, while the third will try to get a license as a consumer finance lender that operates under state rules.
