Payday Lending in Carrboro

Many readers of may be aware of the major state and national movements afoot to reign in the activities of predatory lenders – lending institutions that specialize in products for low-income people and that charge exorbitant interest rates. While a battle rages between the cutting edge laws that have been adopted in NC and the federal government’s efforts to prevent state regulation, the cruel reality of payday lending goes on right here in Carrboro.

Conveniently located along the bypass (to serve the lower income apartment complexes), Advance America offers its lending services. "Whatever the situation, getting an advance of $100 or more at Advance America® is quick, easy and hassle free. Simply write us a personal check. We'll give you the money today and hold your check until payday*" says the cheery website for Advance America. You bring them a check and they give you a bit less than the face value in cash. While the fees charged seem small, the interest rate that this works out to can be truly outrageous. In some cases, according to literature published by Advance America, the interest rate can be up to 500% per annum. That is right - five hundred percent interest.

Not only are interest rates of this kind illegal in North Carolina, but loans of this general type are also illegal. Yet, Advance America has dozens of convenient locations in North Carolina, just for you!

How can this be? Well, the federal banking regulators have decided that our puny consumer protection statutes in North Carolina simply don't apply to federally regulated banks. Advance America is not a federally regulated bank, however, so how can they be operating here? Well, when you read the fine print in their literature and on their website, you see this:

North Carolina:
Advances are made by Republic Bank & Trust Company, an equal opportunity lender, member FDIC. Customers may only have one outstanding advance at a time with Republic Bank. Advance America® is not affiliated with Republic Bank and does not grant credit or deny credit.

Yes, Louisville, Kentucky's hometown bank is in the payday lending business. What kind of bank is this Republic outfit, anyway? Well, their website says: "Republic Bancorp is the holding company for Republic Bank & Trust Company, which serves Louisville, Lexington, and other central Kentucky communities . . . The company originates residential mortgage loans (almost 50% of its loan portfolio), as well as commercial real estate loans (30%), and construction, business, and consumer loans (including home equity, auto, and home improvement loans)."

Funny that it doesn't mention payday lending operations in North Carolina. Why not? Perhaps they do not want their bank's "good" name associated with this sleazy business. Indeed we can see how highly Republic Bank & Trust values its own reputation by reading the 'Ethics' section of their website: "Throughout its existence, Republic has exemplified the highest level of professional integrity and ethical standards. Since Republic's reputation rests on the conduct of its directors, officers and Associates, we expect the maintenance of the highest integrity and ethical standards in the conduct of all business and personal activities."

Noble sentiments. Now why doesn't Republic put its statements into action? Republic should break off its relationship with Advance America and focus on its traditional core business of being a hometown bank in Kentucky. Perhaps Republic's Board of Directors does not really understand what they are doing in our community. Or perhaps they just think that no one in North Carolina cares.

Perhaps you would care to share your thoughts with them. Here are mailing addresses for the Board Members that I could find:

Kevin Sipes
11206 Finchley Rd
Louisville, KY 40243-1865

J. Michael Brown
c/o Wyatt Tarrant & Combs
250 West Main Street
Lexington, KY 40507

Bill Petter
10908 Talon Way
Louisville, KY 40223-5581

Sandra Metts Snowden
Realty World – Sandy Metts and Associates
515 Altagate Rd
Louisville, KY 40206-2943

R. Wayne Stratton, CPA
c/o Jones, Nale & Mattingly PLC
642 South 4th Street Suite 300
Louisville, KY 40202

Sue Stout Tamme
Baptist Hospital East
4000 Kresge Way
Louisville, KY 40207

Bernard M. Trager
6001 Orion Rd
Louisville, KY 40222-5938

Scott Trager
215 Sequoya Rd
Louisville, KY 40207-1658

Steven E. Trager
341 Lochober Rd
Leitchfield, KY 42754-9478


Blaming the Bush administration for a 20 year old problem seems like typical finger pointing. The problem will not be solved until those trying to solve the problem do so honestly.

I disagree. I think the best way to deal with this problem is to get right at the heart of the matter--why are Americans so stupid when it comes to money? Could it, maybe, possibly, have anything to do with utter and complete failure of our vaunted public education system? How many people can even successfully computer interest and understand what compounding is and why these businesses are soaking them?

All the talk about predatory lending is such nonsense. Nobody is holding a gun to anyone's head telling them they have to borrow money at those ridiculous rates. Remember PT Barnum and the "there's a sucker born every minute?" Well, our nation is producing nothing but suckers, so what do you expect to have happen? I completely fail to see how government intervention in private financial affairs will accomplish anything except limiting our personal choices and creating yet more unemployment due directly to government interference in people's private affairs.

Is there even anything in the state constitution giving the legislature the authority to regulate banking or loan making?

I found a non-profit in Durham who is working on making changes in this area... Google power.

I've worked with CRA*NC before. They do good stuff, they've been at it almost 20 years. None of that is going to change this situation as long as the Bush administration continues to ingore the good regulations we passed to protect North Carolinians.

See above in Mark's story: "Well, the federal banking regulators have decided that our puny consumer protection statutes in North Carolina simply don't apply to federally regulated banks."

When I was in Georgia, we developed an economics unit to educate our students about the danger of pawn shops. Same principle as with the payday advances--once you're in their clutches, it's virtually impossible to get out. I just tried to call the Latino Credit Union but they had already closed. I'll research this further tomorrow. Even if they don't have the ability to provide cash advances, they may have educational materials to help the workers understand the hole they are digging for themselves by using this service. With luck, they may also have some strategies to recommend for digging out.



If I understand it correctly, these are advances against paychecks yet to be received. There is the risk to the lender that the paycheck will never be delivered, for example because of dismissal or resignation at work.

The motivation for the borrower is that almost(?) no one else will make this kind of cash advance to people with poor credit records and no collateral. The first time you obtain the advance, it's a cash-flow bonus; you have more cash than you would have, because you don't have to wait two weeks for the next paycheck. But two weeks later, you're out of cash, and your only recourse is to get another advance. Over the medium- and long-term, it's very much a losing proposition. You effectively take a permanent loan in the amount of one paycheck, and over one year you pay 3-5 times as much in fees as the value of that paycheck; that's the 300-500% interest rate you hear about.

I'd be surprised if Self-Help or anyone else offered these kinds of advances, but if so, by all means, let's spread the word.

Thanks Ruby--that's the group. Any idea why our local low income folks are borrowing from Advance America and paying predatory interest rates instead of borrowing from the self-help group? Is it an access problem (to facility), not knowing they exist, not understanding the extent to which they are being exploited, no other way to get checks cashed, etc etc?

Back in the late 1980s, a bank started up in Durham specifically to help low income folks. While having laws enforced is one solution, another might be to offer alternative means for day workers and other low income residents of Chapel Hill-Carrboro to meet their financial obligations. I've searched on community banks and didn't find what I was looking for so I don't know if the Durham bank is still in business or not. Does anyone know? What other support services could be offered to help?

Terri, are you thinking of Self Help?

They are leaders in the state and the nation against predatory lending. They have grown into a gigantic empire and are doing all kinds of good things. They also helped to found the first Latino credit union in the state.

= Ruby

Todd, our NC state legislators already passed a good law against payday lending. The problem is A) this bank isn't based in North Carolina, and B) the federal government (hm, who's running that?) is trying to overrule our state laws.

The best way to take care of this problem? Get a Democrat in the White House supervising federal agencies. (Republicans out there: You'll still have your Congress if you vote for Kerry!)

The best way to do that? Make sure that middling voters know what the Bush administration has done on this issue and many others, such as mercury emissions leading to dangerous blood levels in 8% of women of child-bearing age:

Kudos to Mark for calling attention to Carrboro's own loan sharks. The next local step is to help local targets identify this problem. The step after that would be to help them avoid it, to reduce the demand for check-cashing (often a two-week paycheck advance), but that's a much bigger problem....

Finally, by way of corollary to the list of bank board members: Some of these people may have hometown reputations to protect, and the best way to motivate them may be to get their local media involved.

I agree this is an issue worth dealing with.

However, would it not be far more productive to let our state legislature know how we feel then one bank? Seems like even if this bank dumped the service, there are thousands more to take the place. It would take a change in our laws to protect the citizens it appears.


Nearly six months after Ruby's call to action, NC's Attorney General is paying attention.


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