Category: Virginia

The state of Virginia is now offering short term loans to it’s 100,000 state employees at 25% annualized interest. There are other requirements and they’re limited to two of these a year. Timothy Caine, the governor of Virginia, is pretty proud of this fund.

That’s fine, but this article is bunch of self serving, pork for the governor, by the governor. I did like this comment by Robert Diedrich and I think it’s worth sharing:

It is disingenuous and misleading to suggest that payday loans carry a “400% annual interest rate” when the average payday loan is repaid within 30 days for an interest rate between 10-20%. Here is another fine example of a politician talking a populist game by villainizing those who would put their capital at risk to provide a vital service; credit for those who can’t get it anywhere else. I have no problem with sensible regulation of this lending market, but the Governor should at the very least recognize the service being provided, the risk to the capital providers, and stop demonizing an industry that generates tax revenue and performs a legitimate service to society. Socializing the credit risk of these borrowers is not the answer. By definition, “payday” loans are made to people with jobs, and they have to be greater than 18 years of age: responsible adults engaging in legitimate commerce on clearly identified terms. Stop trying to fix problems that don’t exist, with other peoples money.

Payday Pundit also makes a pretty good point about Virginia’s government loan program.

The Virginia State Employee Loan Program will offer small loans through the Virginia Credit Union and allow state workers who are members to borrow up to $500 twice a year.

The loans will be 6 months and carry a 24.99% APR.

I guess we’ll see what happens. Personally, I’m fine w/ this if they leave the payday loan industry alone. Competition is better than legislation.

You can read the full article in the Richmond Times Dispatch.

This article is a response to an article that hammered Republican Del Oder of Virginia. He’s largely responsible for putting 35% of Virginia payday lenders out of business.

Just curious, how does that help borrowers?

He’s basically saying that the payday law passed in 2002 was in response to the bank rate export model where lenders would rent a bank charter to get around state laws.

Anyway, the article is worth reading.

An article out of Lynchburg, VA had this to say about the payday loan industry:

“… (General Assembly) failed to take the step that would put them on the same playing field with other financial institutions that loan money on a short-term basis to those who need it. That step, of course, is the 36 percent interest rate cap on an annual basis — the same cap that applies to other lending institutions.”

And who are these institutions that are offering short-term cash at 36%? There may be one or two, but that’s it. I don’t know how to sugar coat this, but this type of statement is a blatant lie.

You can read the full article here.

This is a bit misleading. Many companies, like Advance America, are offering revolving lines of credit secured by an auto title loan.

The new payday loan laws essentially doubled the amount of time borrowers had to pay and limited borrowers to one payday loan at a time.

The big question here is: Does legislation work and does it help or hurt the consumer?

One borrower Sheila Woods said that she preferred the original payday loan because she always knew what she would owe, although she admitted they can be addictive. She said she’s gotten away from the dangerous “vicious cycle” of relying on payday or open-end loans.

Payday loans are a simple product that consumers understand. Isn’t that what we’re going for?

You can read the full article in the Daily Press.

It’s not a done deal, but Check ‘n Go is probably going to stop offering payday loans in Virginia. It’s likely they’ll pull out all together.

Check Into Cash is closing 19 of 64 stores — idling about 60 workers — and shifting to pricier, lightly regulated open-ended loans.

With 150 stores in Virginia, Advance America hopes to use a narrow provision in the latest clampdown to continue simultaneously offering payday loans and open-ended loans.

You can read the full article in the Richmond Times Dispatch.