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Payday loans could be on their way back to North Carolina.

N.C. Sen. Jerry Tillman

A bill filed on Feb. 13 by N.C. Sen. Jerry Tillman (R-Randolph) would make the short-term, high-interest legal again, 12 years after lawmakers banned the practice. Tillman, a Republican, is the upper chamber’s majority whip.

Senate Bill 89, which could come up for a vote as early as Tuesday, would legalize loans of 390 percent interest, according to consumer advocates.  Lenders could make loans of as much as $500 for as long as 35 days and could charge fees of as much as 15 percent to cover operational costs, such as holding the check or keeping records.

“This is legalized loan-sharking at its worse,” said Al Ripley of the NC Justice Center, a progressive think tank. “Payday lending is one of the most harmful forms of lending. Despite substantial public opposition, this bill would let high-cost predatory lending back into North Carolina when there is no policy justification for this.”

Cash advance services were forbidden by a law passed in 2001 after pressure from consumer groups charged payday loans were predatory against low-income customers who lacked access to mainline banking services. Earlier this year, Birmingham, Ala.-based Regions Bank ended its payday loan service in N.C., which was made possible by a loophole in federal law that made it possible for out of state banks to provide the service based on their state’s charter.

“This is the same old rip-off we ran out of our state years ago,” N.C. Attorney General Roy Cooper said in a statement. “These overpriced loans trap borrowers in a cycle of debt many cannot escape. Payday lending was a bad idea then, and it’s a bad idea now.”

Major payday lenders are based outside of North Carolina and even the United States, so revenue generated from customers here will cross the border primarily to companies in Mexico, South Carolina, Texas and Ohio.

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