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Financial Services Law Insights and Observations

North Carolina amends loan origination fees and late payment charges

State Issues State Legislation Loan Origination Consumer Lending

State Issues

On April 1, the North Carolina governor signed SB 162, which amends the allowed loan origination fee and late payment charges for certain loans. Under these amendments, the maximum origination fee covered banks are permitted to charge for a loan or credit extension not secured by real property with a principal amount of $100,000 or greater is one quarter of one percent of the principal. For loans with principal amounts of less than $100,000, the maximum origination fee varies between $100 to $250, depending on the loan amount. SB 162 also caps the annual percentage rate at 36 percent for loans or extensions of credit with principal amounts of less than $5,000, where the borrower is a natural person and the debt is primarily incurred for personal, family, or household purposes. Among other provisions, SB 162 also limits allowable late payment charges that vary depending on loan type and loan amount and also states that a late payment charge may not exceed the “amount disclosed with particularity to the borrower pursuant to [TILA],” if applicable. The amendments took effect immediately and apply to contracts entered into, renewed, or modified on or after April 1.

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