RALEIGH Despite opposition that reached all the way to the Pentagon, the N.C. House passed a bill on Thursday that would hike interest rates on many consumer loans.

The bill, which passed the Republican-controlled House 61-54 along mainly party lines, next goes to the GOP-led state Senate. The governor has to sign it before it becomes law.

Supporters said the bill would help lenders who haven't been able to raise rates in nearly three decades, and offer credit to those who otherwise might not get it.

Critics called the rates predatory and said they would prey on vulnerable borrowers. Opponents included AARP, consumer groups, the state banking commissioner, N.C. military leaders and even the secretary of defense.

"We just have to be realistic about this and not think we're doing a service to the poor by denying them credit," said GOP Rep. Paul Stam of Wake County, who supported the bill.

Two Charlotte Democrats joined Republicans as co-sponsors. Another cited her personal experience in opposing the bill.

Among other things, the bill would:

Allow 36 percent interest rates on unsecured consumer loans up to $1,500. Now they're only allowed on loans up to $600.

Increase the maximum size of unsecured loans from $10,000 to $15,000.

Allow lenders to charge higher interest rates on a larger portion of those loan balances. They could charge a 30 percent interest rate on the first $5,000, 24 percent between $5,000 and $10,000 and 18 percent above that.

The 30 percent interest rate had applied only to the first $1,000. The rate for the rest of the balance was 18 percent.

In 2009, lenders made more than 392,000 such unsecured loans for a total of $1.06 billion, according to the state's banking commissioner. Major lenders included CitiFinancial and American General Financial Services (now known as Springleaf Financial Services.)

The bill drew fire from an unusual corner - the military.

"The most vulnerable victims to high-cost loans are the low-ranking soldiers and young military families," Lt. General John Mulholland, the Army's Special Operations commander at Fort Bragg, wrote legislative leaders.

A day before the vote, military officials accused the industry of targeting service members.

"Legislators have a chance to choose between whether they'll support the Department of Defense and troops in the field or lenders and their lobbyists," said Michael Archer, director of legal assistance at Camp Lejeune, who said he was speaking on behalf of the secretary of defense.

"The General Assembly should listen to the top leaders of the Pentagon and the leadership of our North Carolina military bases," Democratic Gov. Bev Perdue said in a statement Thursday. "This legislation will expose our men and women in uniform and their families to high-cost financial obligations and potentially predatory lending practices."

In response, lawmakers passed an amendment that would require service members to get their company commanders to authorize any loans.

Charlotte Democrat Kelly Alexander defended the bill.

"Not everybody can go to the big bank downtown; not everybody has rich relatives," he said. "Either I'm going to go someplace where the sun's shining where the regulations are clear or I'm going to go down and see my friendly neighborhood loan shark. ... We need to deal with reality."

Earlier, in an interview, Alexander said, "the interest rates suck, OK?

"On the other hand," he said, "you're talking about a group of folks where the risk factors are different."

Democratic Rep. Beverly Earle of Charlotte joined Alexander in co-sponsoring the bill. Rep. Becky Carney of Charlotte recalled her daughter's experience.

"She was married to a military man who took her life and spiraled it down," Carney said. "She's still climbing out of that hole."

In a report to the General Assembly earlier this year, banking Commissioner Joseph Smith Jr. said the current law appears to "adequately protect consumer interests" while providing a "relatively safe source of credit" for about 6 percent of North Carolinians.

The industry has potential for profit under the law and produced an aggregate profit in 2009, he wrote.

One campaign finance watchdog said the loan industry made large contributions last year.

Donors tied to the consumer finance industry and their political action committees gave legislative campaigns $172,320 in the last election, according to Bob Hall, director of Democracy North Carolina.

Industry donors gave most of their contributions to Democratic lawmakers until late August, when they switched and gave nearly all of their donations to Republican newcomers or to three GOP leaders, the group found. House Speaker Thom Tillis and Majority Leader Paul Stam each received more than $13,000 from lender interests.

Earle got $300 from the Resident Lenders PAC.