North Carolina Car Loan Laws

How much interest a North Carolina car contract can carry

Chapter 25A of the General Statutes covers the retail installment contract you sign when a dealer arranges the loan. G.S. 25A-15 sets a general cap of 21% a year when the amount financed is $3,000 or more, and 24% when it is less. For a car paid in six or more installments, the dealer may instead use a higher rate based on the vehicle's age.

A vehicle turns one model year old on January 1 of the year after its model year. The 20% age-based tier for one- to three-year-old cars is lower than the 21% general cap, so the general cap applies. To see what a ceiling costs: $20,000 over 60 months at 21% is $541.07 a month, about $12,464 in interest; at 30% it is $647.07, about $18,824. Most buyers with good credit pay far less, so run your own numbers in the car payment calculator.

If a payment is 10 or more days late, the contract may add a flat $18 default charge, once per late installment (G.S. 25A-29).

Doc fees and the highway use tax

• Doc fee. No law sets a dollar limit. Under G.S. 20-101.1 a dealer that charges an administrative or documentary fee must post a sign at least 24 inches on each side in the sales or finance area stating the amount.
• Advertising. Advertised vehicle prices must disclose the fee and its amount, and the buyer's order must show it as a separate line.
• Highway use tax. North Carolina charges 3% of the vehicle's price, collected when the title is issued. On a dealer sale, the trade-in allowance comes off the price first (G.S. 105-187.3).
• Doc fee is taxed. The 3% applies to the doc fee too. A service contract listed separately is not taxed.

What happens if you fall behind in North Carolina

North Carolina has no statute that gives car buyers a notice and a set period to catch up. G.S. 25A-19 allows acceleration or repossession only for a breach of a promise or condition clearly stated in the contract, such as missed payments. After that, the lender may repossess without going to court as long as it does not breach the peace.

1. 1 Notice before the sale. The lender must send a notice describing the sale, any deficiency you may owe, and a phone number for the amount needed to redeem (G.S. 25-9-614).
2. 2 Redemption. Until the sale, you can get the car back by paying the full amount owed, including the lender's expenses.
3. 3 Rebate of unearned charges. The finance charge is rebated as if you paid in full on the earlier of a judgment or 15 days after repossession (G.S. 25A-32).
4. 4 The deficiency. If the sale brings less than the balance, you owe the difference, and you may ask for a written explanation of how it was figured.

Our guides to repossession and the balance left after a sale show what to check at each step.

Where to check a lender and complain

The Office of the Commissioner of Banks licenses consumer finance lenders under the Consumer Finance Act and handles complaints about state-licensed lenders. Banks and credit unions answer to their own regulators. Payday and title-loan rules are on Lendmira's North Carolina page.

Questions people ask