The South Carolina Subprime Marketplace: Title and Payday Loans in South Carolina
There’s a lot of history in South Carolina&mdashthe first battle of the Civil War took place at Fort Sumter. However, the deep history of South Carolina doesn’t mean good living conditions for residents. Approximately 16.6% of the state’s residents (790,715 people) had earnings below the poverty threshold in 2015&mdashwhich is the lowest South Carolina’s poverty rate has been since 2008.1 Unfortunately, it remains higher than the national average of 15.5%.1
While the poverty rate has started to drop, South Carolina’s student loan debt is $30,564 per person, which is the ninth worst in the country.2 As a result, many residents might be looking for alternative means for making ends meet, such as payday loans and title loans in South Carolina. However, it is important to read the information below before getting trapped in an endless cycle of debt with South Carolina payday and title loans.
An Analysis of Payday Loans in South Carolina
South Carolina has more than five times as many payday lenders (902) as McDonald’s restaurants (180)—that’s 22.48 payday lenders per 100,000 people.4 In 2013, nearly 128,000 people took out more than one million payday loans in South Carolina, totaling $402 million.5
Payday loans in South Carolina are allowed under state law. However, with an average of 7.9 loans per borrower and an average loan amount of $391, residents of South Carolina are becoming trapped in an endless cycle of debt.6
The History of Payday Loans in South Carolina
In January 2009, South Carolina Legislation introduced H. 3056, which was passed to help regulate payday lenders by limiting the principal amounts and numbers of loans allowed.7 Unfortunately, payday lenders in South Carolina quickly switched loan models to become Short Term (Supervised) Loans. This type of loan ultimately acts the same as a payday loan, but allows lenders to ask for collateral in exchange for your loan.8 To make matters worse, these short-term lenders prey on the poorest in the communities of South Carolina—the ones that need the most help.8
To make matters worse, on average, those South Carolinians paid off a loan wrote a check for another one only nine days later.10 It seems that right when you think you’re in the clear after paying off a payday loan in South Carolina, you need yet another loan.10
Prior to the payday loan regulations, the number of payday loans in South Carolina exceeded 4 million a year.10 Since then, the number of payday loan stores statewide dropped significantly.10 However, those same payday lenders in South Carolina are simply going by a different name and holding themselves out as short-term lenders.
- Maximum loan amount:$550
- Maximum length of loan:31 days
- Rollovers Permitted:None
- Fees and finance charges:15% of the principal
- Finance charge on a 14-day $100 loan:$15
- APR on a 14-day $100 loan:390%
- Maximum Number of Outstanding Loans at a Time:1
- Repayment Plan:Yes – Once per 12-month period with at least 4 equal installments and no additional fees.
- Cooling-off Period:2 days following the eighth loan in a calendar year.9
The South Carolina government oversees all lending companies in the state, which means any company willing to set up a payday loan business must receive a license from the State Board of Financial Institutions.11 Every payday loan in South Carolina needs to have a written agreement signed by both the borrower and lender. The contract should contain the name of the lender, the transaction date, the sum, and all fees associated with the payday loan.13
On average, a loan of $100 given for a period of two weeks, can lead to an APR of 390%.9
390% South Carolina Payday Loan APR14
1,177 number of South Carolina Payday Lenders14
459% Tennessee Payday Loan APR14
1,344 number of Tennessee Payday Lenders14
Final Notes on Payday Loans in South Carolina
Lawmakers took the right steps toward protecting residents of South Carolina from payday loans, but they didn’t cover all loopholes. Instead, payday lenders have transitioned to short term loans to maintain high interest rates, as well collateral for loans. Payday loans in South Carolina might sound like a quick fix to your money issues, but they’re not—especially short term loans.
An Analysis of Title Loans in South Carolina
A title loan in South Carolina is considered a short-term loan, which has a term of no more than 30 days.13 In South Carolina, title loans are legal, and are typically made for $601 or more to avoid the small loan rate cap that covers loans of $600 or less.13 By operating in this manner, title lenders maintain the ability to charge high interest rates on small loans to trap you in an endless cycle of debt. In fact, title loan fees in South Carolina have reached a total of $187,334,928—now that’s more than triple the amount of payday loan fees ($57,773,701)!14
The History of Title Loans in South Carolina
Since 2011, South Carolina has only had one title loan reform bill reach the floor—and it didn’t pass. This can be attributed to state political contributions from many major title lenders.15 Since 2004, title lenders in South Carolina have contributed $550,700 to state political parties.15 South Carolina currently has 352 title loan companies with a total of 10,071 people per store.13 The total title loan volume is $83,259,968 with a total of 79,904 loans taken out at 300% per year.16
352 South Carolina Title Loan stores13
10,071 People per South Carolina Title Loan Store14
672 Alabama Title Loan stores13
5,427 People per Alabama Title Loan Store14
375 Georgia Title Loan stores13
19,190 People per Georgia Title Loan Store14
South Carolina Title Loan Restrictions
South Carolina lawmakers worked to further protect borrowers from getting further in debt by implementing restrictions on loans. However, title lenders have found a way to work around those restrictions by only offering loan products above $600.
Title loans in South Carolina are subject to loan interest rate caps on loans of $600 and below. To work around this limit, title lenders typically make loans for $601 or more.13 This allows title lenders in South Carolina to continue to charge interest rates of 300% and more, while placing borrowers further in debt.17
Final Notes on Title Loans in South Carolina
South Carolina’s Legislature took the right steps in protecting borrowers from the predatory ways of title loans by implementing a rate cap for loans below $600. In response, title lenders began making the amounts for title loans $601 and higher to avoid these rate caps.3 If South Carolina is to protect their residents from these “loan sharks”, they need to find ways and develop laws to better govern these types of lenders.
How to Report a Lender in South Carolina
So, you’ve taken out a payday loan or title loan in South Carolina, now what? If you are experiencing harassing phone calls, emails or other disruptions you don’t have to just put up with the threats. Reach out to the South Carolina State Board of Financial Institutions to file a complaint (the information is at the right). You can file a complaint and a representative will work to help resolve your issue.
- Address:3rd Floor, Edgar Brown Building 1205 Pendleton St. Columbia, SC 29201
- Phone Number:(803) 734-2020
Outside Help for Payday and Title Loans in South Carolina
Aside from the South Carolina Sate Board of Financial Institutions, you can find help and guidance with South Carolina Appleseed Justice Center. The South Carolina Appleseed Legal Justice Center is an advocate for low-income residents of South Carolina on a variety of issues, including payday loans. Contact South Carolina Appleseed Legal Justice Center for more information on predatory lending and how they can help.
Consumer Protection in South Carolina
The payday loan and title loan industry isn’t making it easy on lawmakers in South Carolina. With every court case against predatory lending, payday and title lenders continue to fight back or find loopholes around the implemented laws.
To help South Carolina and various lawmakers continue their fight against predatory lending and to better protect you, reach out. By understanding warning signs, South Carolina laws and where to report a lender or seek outside help against payday and title loans, you can help set new laws and legislations in place. It may not change for the better overnight, but it’s a step in the right direction for improving the needs of South Carolina residents.
This page has been created as a go-to resource for title loans and payday loans in South Carolina so you can get all the information you need to stay informed—share this page, use it and spread the word about predatory lending.
Guides to Payday and Title Loans in South Carolina Cities
You know payday and title loans in South Carolina are a problem. But what about at the city level?
Check out these payday and title loan guides for the following cities in South Carolina…
1 “S.C. poverty rate drops sharply in 2015, but stays above pre-recession levels” The Post and Courier. Accessed March 16, 2017. http://www.postandcourier.com/business/s-c-poverty-rate-drops-sharply-in-but-stays-above/article_fdf07062-6865-5853-87d8-0a63ae698642.html
2 “State by State Data” The Institute for College Access & Success. Accessed March 6, 2017. http://ticas.org/posd/map-state-data#
3 “State Debt” Ballotpedia. Accessed February 13, 2017. https://ballotpedia.org/State_debt
4 “McDonalds’ vs. Payday Lenders” California State University Northridge. Accessed February 13, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm
5 “Number of payday loans drops in South Carolina” The Washington Times. Accessed March 15, 2017. http://www.washingtontimes.com/news/2014/may/28/report-128k-people-took-out-1m-payday-loans-in-sc/
6 “Payday Lending Abuses and Predatory Practices” Center for Responsible Lending. Accessed March 15, 2017. http://www.responsiblelending.org/state-of-lending/reports/10-Payday-Loans.pdf
7 “”H. 3056” South Carolina General Assembly. Accessed March 6, 2017. http://www.scstatehouse.gov/sess118_2009-2010/bills/3056.htm
8 “Loan Sharks: Payday Loans in South Carolina” Ellsworth Law Firm. Accessed March 6, 2017. http://www.consumerlawhelper.com/loan-sharks-payday-loans-in-south-carolina/
9 “South Carolina State Information” Payday Loan Consumer Information. Accessed March 6, 2017. http://www.paydayloaninfo.org/state-information/48
10 “Number of payday loans drops in South Carolina” The Washington Times. Accessed March 15, 2017. http://www.washingtontimes.com/news/2014/may/28/report-128k-people-took-out-1m-payday-loans-in-sc/
11 “Consumer Loans” State Board of Financial Institutions. Accessed March 6, 2017. http://www.bofi.sc.gov/Pages/ConsumerFinance.aspx
12 “South Carolina Code of Laws” South Carolina Legislature. Accessed March 6, 2017. http://www.scstatehouse.gov/code/t34c039.php
13 “Driven to Disaster: Car-Title Lending and Its Impact on Consumers” Consumer Federation of America and Center for Responsible Lending. Accessed March 17, 2017. http://www.responsiblelending.org/other-consumer-loans/car-title-loans/research-analysis/CRL-Car-Title-Report-FINAL.pdf
14 “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf
15 “Lawmakers protect title loan firms while borrowers pay sky-high interest rates” The Center for Public Integrity. Accessed March 15, 2017. https://www.publicintegrity.org/2015/12/09/18916/lawmakers-protect-title-loan-firms-while-borrowers-pay-sky-high-interest-rates
16 “Car-Title Lending” Center for Responsible Lending. Accessed February 13, 2017. https://www.tml.org/p/Center%20For%20Responsible%20Lending%20Car%20Title%20Loans%20Report.pdf
17 “Alabama Laws on Title Loans” Sapling. Accessed February 15, 2017. https://www.sapling.com/6820766/alabama-laws-title-loans