NC Justice Department joins auto-lending case

RALEIGH — The North Carolina Department of Justice has intervened in a federal court case in South Carolina contesting North Carolina’s laws protecting residents from predatory high-interest loans.

In Auto Money North LLC v. Darin Walters, Carla Walters, Timothy McQueen and Cecilia McQueen, a car title lender is challenging the constitutionality of North Carolina’s laws preventing such loans.

“We kicked predatory, payday, and car title lenders out of North Carolina years ago, and we’re not letting them back in,” North Carolina Attorney General Josh Stein, said in a news release.

Auto Money North has stores in South Carolina, but some of its customers were in North Carolina, the release says.

With car title loans, a lender makes a loan in exchange for a lien that it can use to repossess a borrower’s car if the borrower doesn’t repay the loan on time. North Carolina caps the maximum interest rate on a consumer finance loan at 18% for unlicensed lenders and 33% for licensed lenders.

Auto Money made loans to North Carolinians with triple-digit interest rates, the release says. In one instance, the company gave one North Carolina couple a loan of $18,186 but charged them another $98,339.75 in interest and additional charges.

Because Auto Money made loans to North Carolinians and takes legal action in the state as part of its lending process, courts have ruled that North Carolina’s laws apply to the company’s loans.

A copy of the state’s filing is available through the N.C. Department of Justice website.