Exactly Just How Virginia’s 2020 Fairness in Lending Act Reforms Small-Dollar Loans

Exactly Just How Virginia’s 2020 Fairness in Lending Act Reforms Small-Dollar Loans

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

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Overview

After many years of legislative efforts to foster a safe and viable marketplace for little loans, online installment loans Georgia Virginia lawmakers in 2020 passed bipartisan legislation—the Fairness in Lending Act (S.B. 421/H.B. 789)—to prohibit loans with big last payments, referred to as balloon re re payments, and bring down costs. The legislation rationalizes just exactly exactly what was indeed a disparate structure that is regulatory governed by way of a patchwork of legislation that permitted payday and automobile name loans with unaffordable re payments and needlessly high expenses, and exposed borrowers to economic damage, including duplicated borrowing and high rates of automobile repossession. Past research by The Pew Charitable Trusts revealed that prior to the reforms, businesses routinely charged Virginians 3 x more than customers in lower-cost states. 1

Virginia lawmakers balanced issues in regards to the option of small-dollar credit with all the urgency of stopping lending that is harmful, a challenge that officials various other states also provide struggled with. […]