Ending High Cost Lending in South Carolina

South Carolina is a state that’s very friendly to high cost lenders, which provide title loans, payday loans, and installment loans at interest rates as high as 795%.  Our state laws allows lenders to charge any rate they like, as long as they file it with the state’s Consumer Affairs Commission.

But there is a movement in the state to cap these rates and fees at 36%, which is the federal limit on loans to active duty military and their dependents. The federal government recognized that high interest lenders, which cluster around military bases, were putting our troops in financial harm’s way.  These advocates say the same is true for civilians in our communities.  The May 2021 GPP program explored this topic and how funders could get involved.  Consider this South Carolina data from 2019:

  • Almost 80% of people who got one of these high interest loans are working (60%) or on Social Security (19.1%) – they are trying to make ends meet or help their families in an emergency
  • Federal law caps interest on loans to active duty personnel and their dependents at 36% – there’s no federal cap on loans to teachers, law enforcement officers, nurses, or any other people who may be fooled by the catchy loan jingles on TV (17 states have already capped interest rates)
  • 80% of people who got a payday or title loan actually had credit available elsewhere – they just didn’t realize the trap of these loans because of how easy and friendly they sound
  • Traditional banks get on average 7% return on equity when they make a loan.  Some of these high interest lenders make a 25% return on equity – and from people who can least afford it!
  • The argument that “no other banking institution will work with these people” is not true – there are great credit unions like Self-Help who do this in our state right now.

Susan Stall with Village Engage (and also a GPP member with the FW Symmes Foundation) and Kerri Smith with Self-Help Credit Union reported on how nonprofits, funders, communities of faith, and businesses across the state are coming together to ask legislators to take a stand for SC residents and to end high cost lending so people can spend their earnings on their households rather than on interest payments.

To learn how you can get involved, visit the South Carolina Fair Lending Alliance.


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