Payday Loans in Virginia: Subprime Report
Virginia’s poverty rate in 2017 was about 10.6%, which is one of the lowest rates in the nation. According to the U.S. Census Bureau’s American Community Survey (ACS), the median household income in Virginia reached $72,577 in 2018 —that was $10,640 higher than the nationwide average. Despite such a high median household income and an unemployment rate of only 2.8%, Virginia residents are still searching for alternative means for making ends meet. As a result, many people might turn to predatory bad credit loans such as payday loans or title loans in Virginia.
Payday Loans in Virginia
A payday loan is a small dollar (typically less than $1,000) loan that’s offered for a short term (typically 2 weeks) at an extremely high interest rate (400% APR is typical). This toxic combination of high interest rates and short terms means that these loans are extremely difficult to repay, often leading to a cycle of loan renewals (or “rollovers”) that extend the life of the loan at the cost of additional fees and interest.
Payday loans in Virginia are governed by a set of laws that place restrictions and limits on who can conduct business as a payday lender, what they have to do to obtain a license, and what happens if the lender doesn’t meet the necessary payday lending requirements in Virginia. Even after a payday lender obtains the necessary lending license in Virginia, they must follow laws on how to operate.
Title Loans in Virginia
Title loans are also an approach to lending that lures in cash-strapped consumers in ways that make them end up paying much more in fees and interest than the original loan amount. These types of loans require borrowers to offer their vehicle title as collateral. Title loans generally carry high-interest rates in addition to the risk of borrowers losing their vehicle if they’re unable to repay the loan. They are typically short-term loans that are due back within 30 days. If the borrower is unable to pay after the 30-day period, they often end up taking out another loan or having their vehicle repossessed.
In 2013, there were 378 title loan companies in Virginia, with an average of 340 loans per store. At an average of $976 per loan and a total of 128,446 loans taken out in a single year, title lenders in Virginia are taking a lot of money away from those who need it the most.
Title loans are designed to trap a borrower in a cycle of debt just like payday loans. The maximum amount for title loans in Virginia is limited to the value of the car, which means borrowers can be sucked into a cycle of debt that could end with the repossession of the car. At the end of 4 months, a title loan of $700 may total close to double the original amount of the loan. Even worse, if you don’t have the money at that time, you can kiss your vehicle goodbye.
Consumer Protection in Virginia
You might sometimes come up short on your monthly finances, but that doesn’t mean you should just “deal” with it. There are alternative options available to help you get through that “rough patch”. However, it is important to do your research before committing to anything.
Look for alternatives to help with your money challenges. If you do choose to go the payday loan or title loan route, only accept from a lender that acts in accordance with the laws of Virginia.
How to Report a Lender in Virginia
If you want to find out if a payday or title lender in Virginia is properly licensed and bonded, you can contact the Bureau of Financial Institutions—a division of the State Corporation Commission. You can visit their website, or call their toll-free number at 1-800-552-7945.
By visiting the website for the Bureau of Financial Institutions, you will find a list of names and addresses of lenders who are currently licensed. You can also find a lot of information about your rights as a borrower, and how to file a complaint about a Virginia payday or title lender.
- Address:Tyler Building, 8th Floor 1300 East Main Street, Suite 800 Richmond, VA 23219
- Phone:(800) 552-7945
- Fax:(804) 371-9416