In Richmond, a bipartisan coalition is cracking down on predatory lending.
Walk into a payday lender, and there are dozens of rules they have to follow to protect consumers. Same thing for a car title lender. But log into a website and it’s the Wild West.
That’s why Senator Scott Surovell, a Democrat from Fairfax County, wants to limit consumer finance loans to a 36 percent annual interest rate. “The committees are starting to recognize the structures we put in place ten years ago aren’t working anymore, and that the predatory lending industry has figured out ways to work around the structures we put in place to protect Virginia borrowers.”
Consumer finance loans have been around for a hundred years. But recently online lenders have exploited a loophole that allows for unlimited interest rates if the loan is worth more than $2,500.
Jay Speer at the Virginia Poverty Law Center says now is the time to take action. “If we don’t pass this legislation, we are going to have a lot of internet lending and they’re going to make loans over $2,500 and there’s going to be no restrictions and no interest rate cap. And we’re going to have a huge problem.”
The bill passed with an overwhelming vote in a Senate committee. The only opposition came from internet lenders, who would rather not have the same restrictions as payday lenders and car-title lenders.