RICHMOND—Today, the Virginia House of Delegates passed legislation capping the interest and fees that may be charged under a short-term loan. HB 789, patroned by Delegate Lamont Bagby, eliminates predatory lending practices, disproportionately affecting minorities.
“The only reason they are preying upon Virginians is because we allow it. Passing this legislation means ending predatory practices that marginalize Virginians already struggling to get by. By capping interest rates and increasing the amount one can borrow, we are working to ensure hardworking individuals do not fall victim to a cycle of debt,” said Delegate Bagby. “No one should go into a cycle of unpayable debt just to feed their children.”
House Bill 789 limits the interest rate lenders can charge on a payday or other consumer loan to 36% plus a capped monthly fee. It also increases the maximum amount of such loans from $500 to $2,500, sets the duration of such loans at a minimum of four months, and prohibits the collection of fees and charges that exceed half of the original loan amount.
“This comprehensive reform closes loopholes that currently allow for predatory practices in Virginia.,” said Bagby. “The inability to repay these loans causes a litany of other issues including the inability to establish and improve credit, and apply for student loans. These short term loans become lifetime loans, and we are committed to eliminating this burden on Virginians.”