Virginia Payday Loan Bill Passes Through Senate
By Paul RizzoPayday Loan Writer
The Virginia Senate passed a bill yesterday tightening regulations on instant payday loan lenders - but falling short of changes critics had sought.
The bill, sponsored by Sen. Richard L. Saslaw, D- Fairfax, would still allow lenders to charge up to 391 percent per annum for a two-week loan.
The measure passed the Senate, 35-2, with one senator, whose wife is a lobbyist for the payday-lending industry, abstaining. The dissenters were Sens. Nick Rerras, R-Norfolk, and Walter A. Stosch, R-Henrico. Stosch had introduced a bill that would have placed no fax payday advance lenders under the same 36 percent rate cap facing other makers of small loans, but it failed in committee.
Saslaw’s bill would set up a state database to allow lenders to keep up with limits on payday loans. The bill would restrict the number of cash advances a borrower could have at any one time to three.
Critics of payday cash loans, which include consumer, church and social organizations, say such reforms have been tried and failed in other states. They say payday loans catch borrowers in a debt trap.
Providers of bad credit payday loans, on the other hand, say that they provide a service to borrowers who need money for emergencies and otherwise couldn’t get credit. That was one of the reasons Sen. John S. Edwards, D-Roanoke, gave yesterday for voting for Saslaw’s bill.
Besides Saslaw, Edwards was the only one to speak on the bill yesterday. The day before, efforts on the Senate floor by Edwards and others to tighten the bill and cut allowable interest rates failed.
