Short term lenders may gain support from North Carolina legislators

Lawmakers in North Carolina are warming up to the idea of once again legalizing short term lending in the state, and they may look to neighbors in Virginia for guidance in implementing fair practice guidelines that can help build good consumer credit among residents.

Borrowing is beneficial to responsible debtors
The Associated Press reported the gap created in credit availability by keeping short term lending companies illegal is fueling major revisions to legislature that bans the industry. Lisa Engelkins, a credit counselor, said that short term lending is an area of the consumer credit industry that is necessary for many people.

"There's always going to be something that comes up," she told the AP. "If I had a dire emergency, and I have no other method, then I would probably do the same thing if I had to."

The typical quick loan experience does not lead to financial disaster, according to News & Record, as illustrated by newlywed Josh Bowers, who paid $74 to receive a $300 advance from a short term lender in Virginia, where such businesses are legal and controlled by consumer protection laws. The Virginia resident told the source it would help consumers if short term lenders were able to function legally in all states, as he, like many other Americans, works in a neighboring state rather than the one he calls home.

Legalizing business can liberate consumers
North Carolina could start a national trend to repeal laws that make short term lending illegal within state borders, as the AP claimed it began the movement to outlaw the industry in 2001. Jamie Fulmer, senior vice president of Advance America, said that with the possible reemergence of quick loan outlets in the state, consumers will have to proceed with caution to make sure they do not make mistakes that deemed the business a threat several years ago.

"The short term loan is not unlike other credit products out there," he told the source. "There are inherent risks. Customers...must carefully consider all their choices, and then they must make the decision that's best for them."

The bill proposed in North Carolina would make it so that people the state deems unable to pay back a short term loan would be declined an advance by any business of this kind, which takes the responsibility of approval somewhat out of the hands of short term lenders and allows them to focus on serving better qualified customers overall.

The News & Record reported customers the source spoke with in Danville, Virginia, know that taking out these types of payments can add up to more than they would like, but they accept the extra costs because working with short term lenders is worth it for them in many situations. Whatever the decision by North Carolina's legislature, both sources insisted that short term lending is a viable option for consumers who accept that payments for this type of debt should be issued in as little time as possible.