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