Protesters Gather Outside Virginia Payday Loan Office
In mid-November, protesters gathered outside a payday loan storefront in Virginia to express their discontent with the high APRs Virginia payday loan businesses charge when compared to other states.
Payday loans and car title loans are often advertised as fast cash opportunities for people with bad credit, but consumer advocates have long held that these risky loans trap borrowers in an endless cycle of debt. According to the Consumer Federation of America, the APR on a $100 Virginia payday loan with a two-week term is 687 percent.
“It’s perfectly legal. That’s the saddest part about this,” said Rev. John Copenhaver, vice president of the Valley Interfaith Council, at the protest. Religious leaders from many different faiths spoke of the debilitating financial distress payday loans can cause low-income borrowers.
Because payday loans have short terms and high interest rates, many borrowers have difficulty paying them back on time, which leads payday loan customers to re-borrow in order to make ends meet. About 80 percent of payday loans get rolled over or renewed, according to the Consumer Financial Protection Bureau.
“While marketed as a short-term solution to emergency expenses, neither is typically the case, “ said Rev. Kristin Whitesides, pastor of First Baptist Church in Winchester. “We must work together to break this cycle of recurrent debt that traps far too many of our neighbors.”
Title loans, which are secured by the borrower’s vehicle, come with the added risk of repossession. According to the Virginia Attorney General’s office, approximately 10 percent of title loan borrowers had their vehicles repossessed due to defaulting on their loans in 2017.
Protestors gathered at a similar event in Richmond last month, and the center has plans for additional protests in Fairfax and Hampton Roads in the coming months.
The protest comes after a report released by Pew Charitable Trusts revealed the dangers of predatory lending in Virginia. As the report noted, Virginia is long overdue for new regulations governing payday loans, and residents are in need of affordable access to credit in the state.