A BILL TO BE ENTITLED
AN ACT TO MAKE VARIOUS AMENDMENTS TO THE NORTH CAROLINA CONSUMER FINANCE ACT to increase CONSUMER ACCESS AND CREDIT MARKET PARITY.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 53‑166(a) reads as rewritten:
"(a)	Scope. – No person shall engage in the business of lending in amounts of fifteen thousand dollars  ($15,000) or less and contract for, exact, or receive, directly or indirectly, on or in connection with any such loan, any charges whether for interest, compensation, consideration, or expense, or any other purpose whatsoever, which in the aggregate are greater than permitted by Chapter 24 of the General Statutes, except as provided in and authorized by this Article, and without first having obtained a license from the Commissioner. The word "lending" as used in this section, shall include, but shall not be limited to, endorsing or otherwise securing loans or contracts for the repayment of loans."
SECTION 2.  G.S. 53‑172(a) reads as rewritten:
"(a)	No licensee shall conduct the business of making loans under this Article within any office, suite, room, or place of business in which any other business is solicited or transacted.
Installment paper dealers as defined in G.S. 105‑83, the collection by a licensee of loans legally made in North Carolina, or another state by another government regulated lender or lending agency, and the collection by a licensee of claims of, or payments to, an insurance company licensed in North Carolina and arising in any way from an insurance policy approved by the Commissioner of Insurance shall not be considered as being any other business within the meaning of this section."
SECTION 3.  G.S. 53‑173 reads as rewritten:
"§ 53‑173.  Maximum rate of interest and fee; computation of interest; limitation on interest after judgment; limitation on interest after maturity of the loan.
(a)	Maximum Rate of Interest. – Every licensee under this section may make loans in installments not exceeding three thousand dollars ($3,000) in amount, at interest rates not exceeding thirty‑six percent (36%) per annum on the outstanding principal balance of any loan not in excess of one thousand five hundred dollars  ($1,500) and fifteen percent (15%) per annum on any remainder of such unpaid principal balance. Interest shall be contracted for and collected at the single 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.
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(g)	Limitations on Loans to Individual Borrowers. – 
(1)	No loan shall be made to a borrower before the 91st day after the origination of an existing loan made under this section, nor with less than fifty percent (50%) of the indebtedness of the existing loan reduced in the current balance, unless the borrower receives the greater of one hundred dollars ($100.00) or twenty percent (20%) in cash in excess of the principal amount of the original loan.
(2)	No licensee shall make a loan under this section to repay an existing loan under this section with the licensee without providing a notice, approved by the Commissioner, explaining the benefits of disciplined consistent repayment of installment credit and the potential of increasing costs when obtaining a new loan before final payment.
(3)	A licensee under this section must accept and credit semimonthly and weekly payments from borrowers made before regularly scheduled payments are due and also provide, at the time the loan is made, an example of the potential savings that could occur as a result of more frequent payments.
(4)	No licensee or an affiliate of such licensee shall make a loan to a borrower under this section if there exists an outstanding loan made under this section or G.S. 53‑176 between the licensee and that borrower, unless the existing loan is paid in full from the proceeds of the new loan."
SECTION 4.   G.S. 53‑176 reads as rewritten:
"§ 53‑176.  Optional rates, maturities and amounts.
(a)	In  addition to making loans in the amount and at the interest stated in G.S. 53‑173 and for the terms stated in G.S. 53‑180, a licensee may  make loans in installments not exceeding fifteen thousand dollars  ($15,000) and which shall not be repayable in less than six months or more than 96 months and which shall not be secured by deeds of trust or mortgages on real estate and which are repayable in substantially equal consecutive monthly payments and to charge and collect interest in connection therewith which shall not exceed the following actuarial rates:
(1)	Thirty percent (30%) per annum on that part of the unpaid principal balance not exceeding five thousand dollars ($5,000).
(1a)	Twenty‑four percent (24%) per annum on the unpaid principal balance not exceeding ten thousand dollars ($10,000).
(1b)	Eighteen percent (18%) per annum on the remainder of the unpaid principal balance.
Interest shall be contracted for and collected at the single 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.
	
(b)	In addition to the interest permitted in this section, a licensee may assess at closing a fee for processing the loan as agreed upon by the parties, not to exceed twenty‑five dollars ($25.00) for loans up to two thousand five hundred dollars ($2,500) and one percent (1%) of the cash advance for loans above two thousand five hundred dollars ($2,500), not to exceed a total fee of forty dollars ($40.00), provided that such charges may not be assessed more than twice in any 12‑month period.
(c)	The provisions of G.S. 53‑173(b), (c) and (d) and G.S. 53‑180(b), (c), (d), (e), (f), (g), (h) and (i) shall apply to loans made pursuant to this section.
	
(e)	The due date of the first monthly payment shall not be more than 45 days following the disbursement of funds under any such installment loan. A borrower under this section may prepay all or any part of a loan made under this section without penalty. Except as otherwise provided for pursuant to G.S. 75‑20(a), no more than twice in a 12‑month period, a borrower may cancel a loan with the same licensee within three business days after disbursement of the loan proceeds without incurring or paying interest so long as the amount financed, minus any fees or charges, is returned to and received by the licensee within that time.
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SECTION 5.  G.S. 53‑177 reads as rewritten:
"§ 53‑177.  Fees.
(a)	Recording Fees. – The licensee may collect from the borrower the amount of any fees necessary to file or record its security interest with any public official or agency of a county or the State as may be required pursuant to Article 9 of Chapter 25 of the General Statutes or G.S. 20‑58 et seq. Upon full disclosure to the borrower on how the fees will be applied, such fees may either (i) be paid by the licensee to such public official or agency of the county or State, or (ii) in lieu of recording or filing, applied by the licensee to purchase nonfiling or nonrecording insurance on the instrument securing the loan,  provided, however, the amount collected by the licensee from the borrower for the purchase of a nonfiling or nonrecording insurance  policy shall be the premium amount for such insurance as fixed by the Commissioner of Insurance. Such premium shall be at least one dollar ($1.00) less than the cost of recording or filing a security interest. Provided further, a licensee shall not collect or permit to be collected any notary fee in connection with any loan made under this Article, nor may a licensee collect any fee from the borrower for the cost of releasing a security interest except such fee as actually paid to any public official or agency of the county or State for such purpose.
(b)	Late Fees. – 
(1)	A licensee may charge a late payment charge for any payment which remains past due for 10 days or more after the due date.
(2)	No licensee may charge a late payment charge:
a.	For loans made pursuant to G.S. 53‑173, greater than ten dollars ($10.00).
b.	For loans made pursuant to G.S. 53‑176, greater than fifteen dollars ($15.00).
c.	More than once with respect to a single late payment.
(c)	Third‑Party Payment Fees. – The licensee may collect any actual charges paid by the licensee related to payments submitted by the borrower or at the borrower's request through electronic or other means not affiliated with the licensee.
(d)	Deferral Charges. – A licensee may, by agreement with the borrower, collect a deferral charge and defer the due date of all or any part of one or more installments under an existing loan contract as permitted in the provisions of G.S. 25A‑30."
SECTION 6.   G.S. 53‑179 reads as rewritten:
"§ 53‑179.  Multiple‑office loan limitations.
A licensee shall not grant a loan in one office to any borrower who already has a loan in another office operated by the same entity or by an affiliate, parent, subsidiary or under the same ownership, management or control, whether partial or complete. This section shall apply to intrastate and interstate operations. A licensee shall take every reasonable precaution to prevent granting loans in violation of this section. Subject to the limitation contained in G.S. 53‑173(g)(4), loans granted inadvertently resulting in a total liability of three thousand dollars ($3,000) or less, shall be adjusted to the rates applicable under the Article to a single loan of equivalent amount, and when the total liability on such loans is in excess of three thousand dollars ($3,000), interest shall be adjusted to simple interest at eight percent (8%) per annum on the entire obligation."
SECTION 7.  This act becomes effective October 1, 2011.