Topic: $300 Payday Advance - Payday lending foes have eye on compromise - The Virginian-Pilot
They’ve endorsed bills that would cap the annual rate for payday loans at 36 percent, the ceiling in place for other small consumer loans made in Virginia. Virginia legalized payday lending six years ago after some lenders used a legal technicality to evade the state’s interest-rate ceiling for small loans. The number of Virginia residents taking out payday loans fell almost 3 percent in 2006 to 433,537, according to the Bureau of Financial Institution s’ latest annual report on payday lending. Mark Sickles, D-Fairfax, said he sees a role for payday loans, in part, because “our typical financial institution in Virginia doesn’t make $300 loans. As a representative of the payday lending industry, I believe it is critical for people to understand that prohibiting payday lending in Virginia would only force consumers to use the other, more costly short-term credit products available, such as overdraft protection, late fees on credit cards and other bill payments and off-shore Internet lending. In Georgia and North Carolina, where payday lending was also banned, that the Federal Reserve Bank in New York found that bounced checks, personal bankruptcies and complaints about debt collectors jumped significantly when consumers no longer had the payday loan option. Find Out More
No Tags