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AARP seeks veto of consumer finance bill

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AARP is urging Gov. Pat McCrory to veto a new bill that would raise interest rates for most consumer finance loans.

"This legislation is going to hurt seniors and other consumers that use these loans by increasing interest rates and adding new fees," Doug Dickerson, AARP's state director, said in a prepared statement.

Opponents estimate the bill would cost borrowers in North Carolina $50 million to $70 million a year in higher interest.

Monday night the state Senate agreed with changes made to S.B. 489 by the House, the final step necessary before sending the bill to the governor.

The bill, which was pushed by the consumer finance industry, calls for a 30 percent interest rate on loans of up to $4,000. For larger loans, a blended rate applies: 30 percent for the first $4,000, 24 percent for the next $4,000 and 18 percent for the next $2,000.

The bill also would raise the cap on consumer loans from $10,000 to $15,000. Loans of $10,001 or more would carry a flat 18 percent interest rate for the entire amount.

Consumer finance companies such as OneMain Financial and Springleaf make loans to those who typically have a poor credit history that leaves them with limited options.

The bill also is opposed by Attorney General Roy Cooper and the nonprofit Financial Protection Law Center in Wilmington, among others. No consumer groups are supporting the bill, but two groups -- the N.C. Justice Center and the Center for Responsible Lending -- changed their stance from opposing to neutral after a compromise was reached that lowered the interest rates in the legislation compared to an earlier version of the bill.

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About the blogger

David Ranii has been a business reporter at The News & Observer since 1993. Over the years he has covered information technology, banking, insurance, the pharmaceutical and biotechnology industries, media businesses and real estate. Contact him at 919-829-4877 or e-mail him.