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Three payday lenders leave North Carolina

RALEIGH, N.C. (3/3/06)--Three major payday lenders have entered into agreements with North Carolina to leave the state, essentially eliminating payday lending there, announced state Attorney General Roy Cooper Wednesday.

The three lenders, Check Into Cash, Check 'n Go and First American Cash Advance, based in Jacksonville, operate 152 outlets statewide. None of the Jacksonville sites were making new payday loans as of Wednesday (The Daily News (March 2).

First American Cash Advance and Check 'n Go agreed to stop making loans by March 11. Check Into Cash stopped making loans Tuesday.

"With these agreements, we're not aware of any payday lending companies that are making these types of loans in North Carolina," Cooper said.

Under the agreements, the outlets will remain open for up to four months to collect principal or installment loan payments, but may not charge any interest or late fees during that time. They also will pay $700,000 to nonprofit credit counseling.

Cooper and other payday lending opponents including credit unions have said the loans keep consumers in a destructive cycle of debt when they can't pay off the principal because late fees are added, resulting in fees that are much more than the original loan. Military personnel were especially susceptible to the loans.

Payday lending had been banned in North Carolina since 2001 but some lenders continued operating, saying they were exempt because out-of-state banks originated and issued the loans.

In December, the state banking commissioner ruled that Advance America, the largest chain, was violating state laws that cap annual rates at 36% by charging annual rates of more than 400% on loans. The lender appealed the ruling but closed its 117 offices in the meantime.

The problems with payday lenders prompted State Employees' Credit Union in Durham to offer alternative short-term loans with much lower rates.

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