Just Exactly How Virginia’s 2020 Fairness in Lending Act Reforms loans that are small-Dollar

Just Exactly How Virginia’s 2020 Fairness in Lending Act Reforms loans that are small-Dollar

Legislation closes loopholes that are regulatory caps rates of interest, and offers lessons for any other states

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Overview

After many years of legislative efforts to foster a secure and market that is viable little loans, Virginia lawmakers in 2020 passed bipartisan legislation—the Fairness in Lending Act (S.B. 421/H.B. 789)—to prohibit loans with big last re re payments, referred to as balloon re re payments, and reduce rates. The legislation rationalizes just just what was in fact a disparate structure that is regulatory governed with a patchwork of legislation that allowed payday and automobile name loans with unaffordable re re payments and needlessly high expenses, and uncovered borrowers to monetary damage, including duplicated borrowing and high prices of car repossession. Previous research by The Pew Charitable Trusts indicated that ahead of the reforms, companies routinely charged Virginians 3 x a lot more than clients in lower-cost states. 1

Virginia lawmakers balanced issues in regards to the option of small-dollar credit with all the urgency of stopping harmful financing techniques, a challenge that officials various other states also provide struggled with. Read more