Payday loans in NC are illegal but that doesn’t mean you can get the money you need at rates you can afford
Payday loans cost North Carolina families millions a year in fees and the state regulations outlawing them don’t seem to be doing much good. We’re caught between trying to get the money we need and a state trying to keep us safe from debt predators…but that also might be making it worse.
A new report by the Federal Reserve reveals as many as 60 million Americans are locked out of the financial system for loans and credit. That number is twice as high as was previously estimated and the report noted most of this group is concentrated in the South and Southwest with as many as one-in-eight North Carolina families not able to get a loan.
Payday lenders have managed to get into NC despite the law and collect fees amounting to 400% interest and higher.
I know this might not have been the information you were looking for with a search of payday loans in NC but this is important! Let’s look briefly at why payday loans are illegal in North Carolina then I’ll show you a payday loan alternative to get the money you need at a rate you can afford.
Are Payday Loans Illegal in North Carolina
A survey by the University of North Carolina at Chapel Hill before payday loans were run out of NC found these loans were costing families an average of $520 a year on a loan amount averaging just $375! Because payday lenders only allow you to borrow a few hundred bucks for a couple of weeks, most people are forced to refinance their loan multiple times a year.
That little $15 fee per $100 loan starts adding up and pretty soon, you’re trapped in debt!
North Carolina is now one of 18 states that have capped the interest rate you can be charged on short-term loans at 36%, effectively making payday loans illegal in the state. Payday lenders were exempted from these usury laws until 2001 but it was so harmful to families and service members in the state, legislators passed the North Carolina Consumer Finance Act.
Several online and payday lenders have tried to sneak back in but have been caught over the past decade. Regions Bank was sued in NC for providing payday loans and had to pay over $44 million in a settlement, finally stopping the loans in 2013. The state Attorney General has recently filed a restraining order against a Florida-based online payday loan operator charging up to 200% on illegal loans.
What’s the Difference Between Payday Loans and Personal Loans?
I know that’s a lot of history to read through to find ways to get the money you need but there is a payday loan alternative available in the state. It’s called a personal loan, and while it might seem a little like a payday loan, it’s completely different.
Personal loans are unsecured, just like payday loans, meaning you don’t have to put up your house as collateral. You can also get your money within a day or two on most online lenders.
That’s where the similarities end though.
Payday lenders let you borrow less than $1,000 for two weeks, basically only letting you stay ahead of your bills until your next paycheck. For most people, that means they’re right back where they started, borrowing money again in two weeks.
You get a personal loan for up to $35,000 on most websites and have up to 60 months to repay the loan. This means you can borrow enough to get out in front of your bills, pay off the higher-rate debt keeping you poor and pay it off with lower monthly payments.
How to Get an Online Personal Loan in NC
You can apply for a personal loan through a traditional bank or one of the online websites I’ll talk about. You fill out an application and the lender checks your credit to estimate an interest rate. Once you agree to a loan, the money is deposited directly in your bank account and usually within 24 – 48 hours.
The only requirement for most personal loan sites is that you have a bank account and a job making at least $2,000 a month. You also need to be 18 years old and have a credit score over 520 FICO.
The trick to getting the best rate on a personal loan is to try a few different websites at the same time. It doesn’t affect your credit because the lender only does a soft-check of your credit to approve the loan. This means you can shop around for the best rate and pick the best deal.
I’ve included a table at the end of the article but wanted to highlight a few of the personal loan websites I’ve used and recommend.
PersonalLoans.com is the most often recommended by readers and I’ve used the site twice for debt consolidation and a home improvement loan. The site is a loan aggregator meaning it helps shop your loan around to different lenders to find the best rate.
BadCreditLoans.com is another popular site because they specialize in borrowers with very bad credit. Even if you get denied a loan on another site, you’ll usually get approved here.
How to Get a Peer-to-Peer Loan in NC
Another option for a loan is called peer-to-peer lending. These are loans directly from investors instead of from the lender but are really no different for borrowers.
A peer-to-peer loan is made directly from investors instead of through a lender. On a p2p website like Lending Club, investors can sort for loan applications that meet their investing criteria and then put as little as $25 to fund the loan. Once enough investors have funded the loan, the money is disbursed to the borrower’s bank account.
Credit standards tend to be a little higher on peer-to-peer lending sites with the minimum FICO being 640 on Lending Club but loan rates tend to be lower as well.
P2P loans are legal in North Carolina and you can apply online. You generally need to be at least 18 years old and have a verifiable bank account. Check your rate on Upstart for a loan up to $50,000 – won’t affect your credit.
How to Find Nearby Payday Loan Stores in NC
Despite payday loans being illegal in the state, lenders have found a way to sneak into North Carolina. Search Google for nearby payday loan stores and you’ll see the blank map…but lots of website options on the side.
Understand that these online payday loan stores are just as bad as the one you’d find down the block. They might call themselves finance companies or check cashing but it’s the same thing when it comes to fees on your loan.
If you do need money and can wait the 24 hours to have it deposited directly into your checking account, I’ve included a table of legit personal loan sites I’ve used and reviewed. Some specialize in bad credit loans while others offer lower rates for good credit borrowers.
|Peer to Peer Lending Site||Loan Fees||Credit Score Needed||Loan Rates||Notes|
|5%||580||9.95% to 36.0%||Best p2p loan site for bad credit borrowers. Lower credit score and three options including peer loans, bank loans and personal loans.|
|No Fee||Not available but higher than most, around 680 FICO||5.99% to 16.49% (fixed rate)|
5.74% to 14.6% (variable rate)
|Special discounts for variable rate loans. Offering $100 cash back on peer loans.|
|1% to 6%||620||6.25% to 30.0%||Best peer loans for graduates and no credit history.|
|No Fees||520||Vary by State||No fees and lowest credit requirements for lenders|
|1% to 6%||640||6.95% to 35.89%||Low rates on p2p loans for good credit borrowers.|
Payday loans in NC are illegal but that hasn’t stopped online lenders from trying to take advantage of families in the state. Understand the dangers of payday and cash advance loans and the alternative in personal loans. Use a personal loan to lower your interest rate on credit card debt and get out ahead of your bills for a change. Only borrow as much as you need and always make sure you get a loan that you can afford.