Payday loans can be a quick solution to short-term financial issues. However, they are not a legal option in Green Mountain, North Carolina. While some states permit payday loans, they are prohibited in North Carolina. The North Carolina General Statutes 53-281 and the Consumer Finance Act (N.C. Gen. Stat. § 53-166) prohibit payday lending in the state. In this article, we will explore payday loans and why they are not a legal option for borrowers in Green Mountain, North Carolina.
What are payday loans?
A payday loan is a short-term loan that an individual borrows to meet their financial needs before their next payday (hence the name “payday” loan). These loans are usually taken out for a period of two weeks, after which the borrower is expected to repay the loan plus interest in one lump sum.
How do payday loans work?
The process of obtaining a payday loan is simple – a borrower fills out an application either online or at a physical location. The loan provider evaluates the application and if approved, the funds are sent to the borrower’s bank account usually within 24 hours. Once the borrower’s payday arrives, the loan provider will automatically deduct the loan amount plus interest from the borrower’s bank account.
What makes payday loans attractive?
Payday loans are often attractive to those who have poor credit or no access to traditional bank loans. These loans do not require a credit check, making them a quick and easy option for individuals in need of cash.
Why are payday loans prohibited in North Carolina?
Payday loans have been banned in North Carolina since 2001. State lawmakers passed an act called the Consumer Finance Act, which included a prohibition on payday lending. The North Carolina Attorney General’s Office and the State Commissioner of Banks warn against payday loans, advising that they are illegal and dangerous.
What happens if you take out a payday loan in North Carolina?
Consumers who take out payday loans in North Carolina can face serious consequences. Borrowers can face high interest rates, fees, or even loss of property. Additionally, payday lenders can be subject to heavy fines and penalties by the state.
What are some alternatives to payday loans?
If you are in need of cash and cannot obtain a traditional bank loan, consider the following alternatives:
- Credit counseling
- Short-term loans from credit unions
- Personal loans from family or friends
- Payment plans through the creditor or service provider
- Credit card cash advances
Interesting Facts and Statistics about Payday loans
- The average interest rate for payday loans in the United States is 391 percent.
- 13 percent of payday loans are taken out for emergencies or unexpected expenses, while 16 percent are taken out for recurring expenses like rent or utilities.
- A typical borrower of payday loans is a white female between 25 and 44 years old.
- The Center for Responsible Lending estimates that payday loan fees cost Americans nearly $3.4 billion per year.
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