General Assembly Update: Payday Loans

The Virginia Payday Loan Act was first adopted by the Virginia General Assembly in 2002 and exempted the industry from the prior 36-percent interest rate cap. Virginia caps the interest rate on a one-week loan at 780 percent and 390 percent for two-week loans. As bad as the interest rate may be, the worst part is the debt trap that the borrower gets caught in. Payday loans are designed to trap the borrower into repeat loans.¹

There are currently a number of bills filed in the General Assembly attempting to “fix” the Payday Loan issues in Virginia. I have attempted to summarize them, provide links to them, and let you know where those bills are in their journey through the General Assembly.

HB12, HB249, HB1377, HB1404, SB24, SB279, SB238, and SB670 all propose limiting the annual interest rate for Payday Loans at 36%.

HB12, HB249, HB1377, HB1404: In House Commerce and Labor Committee
SB24, SB279, SB238, SB670: In Senate Commerce and Labor Committee

SB25, SB156, SB278, and HB730 propose repealing the Payday Loan Act entirely with effective dates of July 1, 2008, July 1, 2010, January 1, 2009, and July 1, 2010 respectively.

SB25, SB156, SB27: In Senate Commerce and Labor Committee
HB730: In House Commerce and Labor Committee

HB176 Requires the creation of an internet accessible statewide database of payday loans.   Lenders would be required to query the database to determine whether the borrower is eligible for the loan. The database would be paid for by a 50 cent fee added to each payday loan. HB1103, HB1352, and SB588 would create the same database as above as well as an Extended Payment Plan; they would change the minimum term of a payday loan from seven to 14 days; require a one day waiting period between the repayment of a loan and making a new loan; and other tweaks.

HB176, HB1103, HB1352: In House Commerce and Labor Committee
SB588: In Senate Commerce and Labor Committee

HB189 gives localities the power to regulate the interest rate and number of payday loans allowed within their jurisdiction.

HB189: In House Commerce and Labor Committee

Thanks to Waldo Jaquith for creating Richmond Sunlight, an invaluable tool in tracking these bills and the Virginia General Assembly.


3 Responses to General Assembly Update: Payday Loans

  1. Laura Thom says:

    I feel the more restrictions legislature can impose on cash advance businesses the better. Lower income people are easy prey for these businesses, and what they are could certainly be described as usuary.

  2. Elyse Kalfus says:

    CONCORD – The payday and auto title loan industry took a hit in the New
    Hampshire House today when lawmakers voted to limit annual interest rates on loans to 36 percent a year. Vote 207-124
    Now it goes to the senate.
    Let’s hope our lawmakers will take the hint and start to think about their constituents who puts them in office, instead of the industry lines their pockets. Take a lesson from the states who have learned that reform doesn’t work, and that once these predatory practices are gone they are not missed because programs open up that really help the people that need them.

  3. You’re welcome!

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