Back in 2009, the South Carolina legislature passed a bill that doubled the amount a person can borrow from a payday lender to $600. The governor vetoed the bill, but both the state house and senate overrode the veto and the new limit became law.
The new law also included a two day cooling off period. That means that borrower must wait two days before taking out another payday loan. Some legislators wanted to extend that waiting period to seven days, but the two day period prevailed after heavy debate.
A law to limit the amount a person could borrow based on income was shot down by the state lawmakers.
Legislators also limited the number of payday loans an individual could take out to 10 per paycheck. Under the law, a borrower must wait until the next paycheck before taking out another loan. Most lenders found this requirement superfluous as data shows that few borrowers take out that number of payday loans.
The legislature passed a law that a payday loan database be established. The law requires payday lenders to check the database every time a person applies for a payday loan to determine if that individual has any payday loans outstanding.
Lenders who do not use the database can be forced out of business by state law. The law also gave the green light for payday lenders to debit borrowers’ bank accounts.
The maximum term for a payday loan still stands at 31 days. Outstanding balances may not be rolled over. That outstanding balance must be paid before a borrower can obtain another loan.
Interest rates remain the same. The finance charge for every $100 borrowed is $15 for every 14 days. That comes out to a 391 percent APR. That means that when a borrower takes out a maximum $600 loan, he will pay $270 in interest.
All lenders must pay a $1,000 application fee to set up business in the state of South Carolina. Another $500 must be paid as an investigative fee. That fee is not refundable. The minimum net worth of lenders must be at least $25,000. It’s more likely than not that a new round of payday lending laws will emerge from the state legislature next session because of increasing complaints from consumer groups.