Virginia Payday Loan Laws & Legislation

Virginia Payday loan laws. Virginia Payday loan legislation. Virginia has specific payday advance laws. The permitted fee is 15 % of the face amount of the payday loan amount. The permitted time period is a minimum of 7 days.

The maximum amount of the payday loan allowable is $500.00. Rollovers are prohibited.

For a thorough discussion of the payday loan industry and access to our payday loan training materials, we recommend you proceed to Payday and Paycheck Loans.com

Senator threatens to pull payday lending bill if changes made
By DENA POTTER
Associated Press Writer February 12, 2007

RICHMOND, Va. -- The sponsor of the last surviving piece of legislation to rein in the payday loan industry threatened Monday to pull his bill if opponents try to place harsher restrictions on the short-term, high-interest lenders.

Sen. Richard L. Saslaw's industry-backed bill is the only one remaining out of more than a dozen introduced this year to either reform the industry or repeal the 2002 law that allowed payday lenders to sidestep the state's 36 percent annual interest rate limit.

Efforts in the House to reform the industry died last week when the bill's sponsor struck his legislation after an amendment was added to cap the annual interest rate payday lenders could charge at 72 percent.

Saslaw said he would follow suit, killing all hopes of reform this year.

"If any amendment gets put on it that I don't like, I certainly will" strike the bill, said Saslaw, D-Fairfax.

Del. Jennifer L. McClellan, D-Richmond, who fought for the 72 percent interest rate cap on the House version of the bill, said legislators were hoping for a compromise before Tuesday, when a House committee is scheduled to hear the bill.

"I think it depends how close we are to a deal this afternoon," she said. "If we can't reach a deal today, I think probably the bill will be stricken."

McClellan said she could live without the 72 percent interest rate cap as long as some sort of measures to protect repeat borrowers--like a cap on the number of loans an individual could take out in a year--were added.

The bill would create a statewide database to track payday loans and limit to three the number an individual can have out at one time. It also would require a 24-hour cooling off period before someone can take out a loan after paying one off and allow borrowers with three loans to have 60 days to pay them off.

Payday loans work by allowing a borrower to write a check up to $500, plus a fee for $15 for every $100 borrowed. The company holds the check until the customer's next payday, when he or she either pays off the loan or the lender cashes the check.

The average payday loan customer in Virginia took out seven loans in 2005, but opponents say that number is deceiving because most customers borrow from one lender to pay off another.

"To me, the goal has always been to break the repeat borrower cycle, and an interest rate cap is one way to do it, but it's not the only way," McClellan said. "Their goal is to stay in business, and the question really is are those two goals compatible?"

The industry already has come a long way, said Jamie Fulmer, investor relations director for Advance America, Cash Advance Centers Inc., the nation's largest payday lender.

"We certainly believe that the reforms that are out there represent very significant steps toward the protection of customers," Fulmer said.

Industry supporters have said a 72 percent cap would put the nearly 800 Virginia stores out of business, allowing them to charge only $2.77 for a $100 two-week loan.

In 2005, 445,000 customers in Virginia took out more than 3.3 million payday loans, according to industry figures. Supporters argue that cutting out payday lenders would force customers to either bounce checks, pay high credit card or utility late fees or turn to illegal Internet loan companies that charge much higher rates.

Virginia is one of 38 states and the District of Columbia that allow payday lending in some form. The businesses are prohibited in neighboring West Virginia, Maryland and North Carolina.

Legislation in several states aims to clamp down on the industry.

McClellan said she would prefer nothing pass rather than the General Assembly put in place meaningless reform.

"I'd much rather come back next year and try to get real reform," she said