Frequently Asked Questions
This section answers many of your questions and concerns regarding the Consumer Finance Act (CFA). Please use any of the links to the left for additional information.
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General North Carolina Consumer Lending Information
What interest rates can be charged?
In general, interest rates for consumer loans in North Carolina are governed by Chapter 24 of the North Carolina General Statutes (NCGS). The Maximum Rate of Interest can be found under the News and Research section of this website.
Higher-Interest Rate Loans
Direct lenders seeking to charge rates higher than allowed under Chapter 24 on consumer term loans of $25,000 or less, are subject to the CFA located in NCGS Chapter 53, Article 15. Lenders operating under the CFA must be licensed by and are subject to regulation by the NCCOB.
Lenders making consumer finance term loans less than $25,000 and at a rate of 16% or lower or loans that fall under the Retail Installment Sales Act (RISA) are not regulated by NCCOB. Please contact the North Carolina Department of Justice (NCDOJ) for more information.
The Consumer Finance Act
What loans are covered by the Consumer Finance Act (CFA)?
The CFA covers smaller-dollar loans originated for North Carolina consumers, less than $25,000, which provide direct installment term financing at interest rates higher than what is allowed under Chapter 24. These loans are originated for a consumer purpose and are not secured by real estate. The lender funding the loan is traditionally a non-depository finance company.
As of October 1, 2023, the CFA also applies to servicers of the above loans.
Does the CFA apply to all businesses in North Carolina?
No. The following businesses are exempt from licensure (NCGS § 53-191):
- Banks
- Trust companies
- Savings and loans associations
- Cooperative credit unions
- Agricultural credit corporations or associations organized under the laws of North Carolina
- Production credit associations organized under the Farm Credit Act of 1933
- Pawnbrokers lending or advancing money on specific articles of personal property
- Industrial banks
- A business that negotiates loans for real estate as defined in G.S. § 105-41; and
- Installment paper dealers as defined in G.S. § 105-83.
What is the maximum loan amount allowed under the CFA?
The maximum loan amount under of the CFA is $25,000. (NCGS § 53-176 (a))
How many months are allowed in the loan term?
Loans must be scheduled to be repaid over a minimum of twelve (12) monthly payments and a maximum of ninety-six (96) monthly payments. (NCGS § 53-176(a))
What is the maximum interest rate allowed on a CFA loan?
The maximum interest rate on a CFA loan is determined by the loan amount.
With respect to a loan with a loan amount at origination not exceeding twelve thousand dollars ($12,000), the interest rate is a blended rate with: thirty three percent (33%) per annum on that part of the unpaid principal balance not exceeding four thousand dollars ($4,000), twenty four percent (24%) per annum on that part of the unpaid principal balance exceeding four thousand dollars ($4,000) but not exceeding eight thousand dollars ($8,000), and eighteen percent (18%) per annum on that part of the remainder of the unpaid principal balance.
Any loan with a loan amount exceeding $12,000 carries a maximum interest rate of 18%. (NCGS § 53 176)
Once an account reaches maturity or becomes subject to judgment, the interest rate should be lowered to eight percent (8%). (NCGS § 53 173(d) and 53 173(c))
Fees
Can a fee be charged on a late payment?
If disclosed within the loan agreement, borrowers may be charged a late fee for a payment that remains past due for ten (10) days or more. The maximum amount of the fee charged is defined by NCGS § 53-177(b)(2) and is currently $18, but the amount of the fee is subject to change.
How many late fees can be assessed on a payment?
Only one late fee may be imposed with respect to a particular late payment. However, a licensee may collect more than one late payment fee from any payment made toward more than one installment payment so long as the number of late payment fees collected does not exceed the number of installment payments that were past due for 10 days or more and to which the payment was applied. (NCGS § 53-177).
Can a loan payment be deferred?
Yes. Loan payments may be deferred. If more than one loan payment is being deferred, a written agreement should be executed. (NCGS § 53-177(c))
Can a fee be charged to defer a loan payment?
A deferral charge of no more than one and one-half percent (1.5%) can be charged for each monthly installment deferred. If the deferral entails deferring more than one monthly installment, a written deferral agreement should be executed. (NCGS § 53-177(c))
Can the maturity date on a loan be altered or extended?
No. The deferral shall not alter the original maturity date, even when the final payment is after the maturity date assigned at origination. (NCGS § 53-177(c))
2023 CFA Amendments Session Law 2023-61(Senate Bill 331)
What changed when the CFA was amended in 2023?
A summary of the changes can be viewed here: Bill Summary
License Requirements
How do I apply for a consumer finance license?
Applications for a new company, branch, or other business are submitted online. Find details on the Licensing Application page.
Does my business need a consumer finance license?
Review the Consumer Finance License Decision Guide. A license is required if your business originates and/or services loans under the Consumer Finance Act.
How much does it cost to obtain a consumer finance license?
An application fee of five hundred dollars ($500.00) is assessed to investigate the application. The fee is retained irrespective of whether or not a license is granted. (NCGS § 53-168(b))
Do companies servicing North Carolina CFA loans need to be licensed by NCCOB?
Yes. Senate Bill 331 amended the scope of 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 CFA loans should apply for a license.
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
General Questions
Is there an annual renewal?
No. The North Carolina Consumer Finance license is a perpetual license and does not require renewal. However, licensees are required to submit an annual report of condition through the NCCOB Online portal by March 31st. (NCGS § 53-184(b))
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 one thousand dollars ($1,000.00). See sample table below.
| Assessment Per Item | Calculated Assessment | ||
|---|---|---|---|
| Total Assets | $2,675,309 | ||
| # of full $100,000 portions | 26 | $18 | $468 |
| # of partial $100,000 portions | 1 | $18 | $18 |
| # of Offices | 7 | $300 | $2,100 |
| Grand Total Assessment | $2,586 | ||
Consumer Finance Assessment Calculator
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.
Is a consumer finance licensee required to maintain a physical location within North Carolina?
No. A licensee may conduct and carry on the licensee's business at one or more locations approved by the Commissioner. These locations do not have to be physical locations within the State of North Carolina. (NCGS § 53-170(a))
Do I need a consumer finance license for each branch location?
Yes. Each location where the licensee will conduct business must be approved. (NCGS § 53-170(a)). Each licensee must maintain loanable assets of at least fifty thousand dollars ($50,000) per location for the operation of the business. (NCGS § 53-168(d)).
Applications for a new company, branch, or other business are submitted online. Find details on the Licensing Application page.
When does the NCCOB need to be notified of changes in licensee management, branch location, or branch closure?
If any change occurs in the name and address of the licensee (this includes branch relocations and closures) or of the president, secretary, or agent of a corporation holding a license, or in the membership of any partnership holding a license, a true and full statement of the change, sworn to in the manner required by this Article in the case of the original application, shall be filed with the Commissioner within 90 days of the change. (NCGS § 53-170(c))
What ongoing monitoring is performed and how often are licensees examined for compliance?
Licensees submit quarterly portfolio data to the NCCOB. Compliance examinations are performed periodically based upon the risk profile of the institution.
How can our business get updates from the NCCOB on the CFA?
Visit the NCCOB Consumer Finance Bulletin Board. This page includes recent announcements regarding the CFA and training events hosted by the NCCOB. Be sure to subscribe to be alerted by e-mail notification of new messages.
Still have questions?
If you still need assistance, please call our office at (919) 733-3016 or send your questions via e-mail to consumerfinance@nccob.gov and we will be happy to assist you.