Payday Loans in South Carolina

Posted on Thursday, September 10th, 2009 at 5:25 pm in Cash Loan Info by State

On May 21, 2009, South Carolina’s General Assembly passed a new bill that doubles the sum you can borrow from a payday loan company to $600. A game of back-and-forth then followed, in which the law was ratified on May 27, and then vetoed by the Governor on June 2. The veto was subsequently overridden by the South Carolina House on June 16, and by the Senate later that same day. In short, the bill has now become law thanks to the overwhelming support it received in the state legislature, and despite the Governor’s objections.

In addition to the increased upper limit of $600, South Carolina’s new payday loan legislation introduces a cooling-off period of two days between each cash loan advance. The proposed waiting time was originally set at seven days, before being negotiated down. Legislators had also wanted to base the maximum amount a person could borrow on their income, however this stipulation was also dropped during negotiations.

There is also a provision that limits the number of paycheck loans you can take out to 10 in a row, after which you have to wait until your next payday has passed before you can apply for another one. This clause seems a bit unnecessary given the Federal Reserve’s findings earlier this year that very few borrowers would actually use that many payday loans.

An online database of South Carolina’s payday loan customers is in the process of being set up. Under the new law, from February 1, 2010 lenders will have to check the database each time an application is made to ensure that the prospective customer doesn’t have any other payday loans outstanding. In other words, the new legislation retains the previous rule that says a borrower may have only one payday loan at a time. It also allows lenders to debit their clients’ bank accounts for the first time.

As before, the maximum duration of any payday loan in the state is 31 days, although many loan providers set 14-day terms as per the standard practice in the industry. You’re still not permitted to roll over your cash advance beyond the mandated 31 days and have to settle it in full before possibly taking out another one following the two-day cooling-off period.

The interest charges on a payday loan in South Carolina also remain unchanged. For every $100 you borrow, you have to pay $15 in finance charges every 14 days, which equates to an APR (annualized percentage rate) of 391%. So if you borrow the full $600 for the maximum 31 days, you would be charged $270 in interest (6 x $15 x 3 terms).

One rather curious feature of the state’s payday lending law is that it doesn’t prohibit lending to the unemployed. Although many payday loan companies won’t approve your application if you rely on an unemployment check for your income, there are some that will – and it’s perfectly legal, according to state regulators.