Consumer Finance Frequently Asked Questions

Overview

The North Carolina Office of the Commissioner of Banks charters, licenses and regulates a variety of financial institutions within the State. Answers to many of your questions and concerns may be found in this section. Included are also FAQs regarding Senate Bill 331.  If you still need assistance, please call our office at (919) 733-3016 and we will be happy to assist you.

How do I apply for a consumer finance license?

Applications for a new company, branch or other business are to be submitted online. Find details on the Licensing Application page.

If I am overdue on a payment, when can my account be assessed a late fee?

Effective July 1, 2013, lenders may contract for a late fee of up to $15.00 for loans that remain past due for 10 days or more. This means that loans made after July 1, 2013, may permit late fees to the extent allowed by law; however, the loan agreement must also authorize the late fee.

Recent changes to the Consumer Finance Act establish a ten day grace period that starts the day after the payment is due, authorizing a late fee only for a payment that “remains past due for 10 days or more after the due date.” For a loan due October 1, a late fee can be assessed no sooner than October 12. In addition, any late charge can only be assessed only once per late payment, so multiple late fees cannot be assessed for a single overdue payment.

If I have missed multiple payments, how many late fees can be assessed?

For loans made after July 1, 2013, the determination of whether a late fee can be assessed is to be arrived at independently for that payment period. If the payment is both timely and sufficient, no late fee can be assessed for that payment period. In other words, outstanding late fees cannot be the sole basis for a payment being considered incomplete.

Scenario One: The payment due October 1 is made on October 14. A late fee may be assessed for late October payment, if authorized by the loan agreement.

Scenario Two: The payment due October 1 is not made until November 1. The payment due November 1 is made on November 10. The only late fee that may be assessed is for the late October payment as the November payment was made during the grace period.

Scenario Three: The payments due October 1 and November 1 are both made on November 14. A total of two late fees may be assessed – one for the October payment and one for the November payment.

Can I be charged a fee to defer my payment?

For loans made after July 1, 2013, lenders may assess a deferral charge of no more than one and one-half percent (1.5%) of each monthly installment deferred. If the deferral is of more than one monthly installment, you and your lender will need to execute a written deferral agreement.

Are licensees required to pay an annual assessment?

Yes.  Pursuant to NCGS §53-167, licensees shall pay to the Commissioner an assessment not to exceed eighteen dollars ($18.00) per one hundred thousand dollars ($100,000) of assets, or fraction thereof, plus a fee of three hundred dollars ($300.00) per office; provided, however, a consumer finance licensee shall pay a minimum annual assessment of not less than five hundred dollars ($500.00). See sample table below.

Consumer Finance Assessment Calculator

FAQs Regarding Session Law 2023-61(Senate Bill 331) - An act to amend the North Carolina Consumer Finance Act (CFA) 

Where can I find Senate Bill 331 which contains the amendments to the CFA? 

Senate Bill 331 can be viewed here: SB331
A summary of the changes can be viewed here: Bill Summary

Do loan servicers of North Carolina CFA loans need to be licensed by NCCOB? 

Yes. Senate Bill 331 amended the scope of North Carolina General Statute (NCGS) § 53-166 (effective October 1, 2023) to include servicing CFA loans. Any business that receives scheduled periodic payments from consumers in relation to a CFA loan must be licensed to lawfully collect the payments beginning October 1, 2023. Companies engaged in servicing of CFA loans should apply for a license. 

My business is licensed by the NCCOB to originate loans under the CFA, will I need an additional license to service loans? 

No. A Consumer Finance license issued by the NCCOB authorizes a business to originate and service CFA loans. 

Does a debt buyer, licensed debt collector, or passive debt investor need a CFA license?

Yes, in certain circumstances. Collecting payments on active/current loans originated under the CFA requires a CFA license. Attempting to collect on a CFA loan that has been charged off and is no longer accruing interest or fees does not require a CFA license.  

If a collection agency is licensed by the North Carolina Department of Insurance, do they also need a CFA license?

Yes, in certain circumstances. A licensed collection agency collecting payments on active/current loans originated under the CFA needs a CFA license. However, a licensed collection agency attempting to collect on a CFA loan that has been charged off, is no longer accruing interest or fees, and collection of payments is based on a lump sum does not need a CFA license.  

Would a law firm collecting payments on behalf of a client need a CFA license?

Yes, in certain circumstances. Collecting payments on an active/current loan originated under the CFA requires a CFA license. If the payment being collected is associated with a court-ordered judgment a CFA license is not required. However, all CFA licensees must comply with 04 NCAC 03E .0601(6). Please note that Confessions of Judgment are prohibited under the CFA.

These examples are not all-inclusive. If you have any questions about your company’s activities, please submit your questions by e-mail to: consumerfinance@nccob.gov