Senate legislation introduced today was designed to tighten down on payday lenders who were getting around the new regulations that took effect January 1st. Senator Mark Herring’s bill requires any company that loans money for a payday loan under Virginia’s open-end credit law to charge no more than 36 percent annual interest.
Payday lenders currently operate in Virginia under the open-end credit law, which currently allows companies to charge anything they wish as long as they do not require any payment for the first twenty five days. These payday lenders switched over to this model after January 1st to try and avoid the new restrictions that drastically reduced the number of payday loans borrowers could take out annually.
“Their willingness now to move into this type of loan now shows that they will do what they can in order to extract as much money from borrowers as they can, however they can,” Herring, D-Loudoun, said at a Capitol news conference
Jamie Fulmer, a spokesman for Advance America Cash Advance Centers Inc., the nation’s largest payday lender, said his company’s new line of credit is one of several new payday loans it has begun offering in the past few years. He also said that they shouldn’t be punished for trying to compete, especially since it had received approval from state regulators to offer the loan.
“To say we’re a company or an industry that has acted in bad faith and can’t be trusted is unfair, because we didn’t hide this,” Fulmer said.
To read more about the Virginia bill cracks down on car title, payday lenders head on over to Forbes.