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

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

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

After many years of legislative efforts to foster a safe and viable marketplace for 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 repayments, referred to as balloon repayments, and reduce costs. The legislation rationalizes just what was indeed a disparate regulatory framework, governed by a patchwork of guidelines that permitted payday and automobile name loans with unaffordable repayments and needlessly high expenses, and exposed borrowers to monetary damage, including duplicated borrowing and high prices of car repossession. Past research by The Pew Charitable Trusts showed that prior to the reforms, businesses routinely charged Virginians 3 x a lot more than customers in lower-cost states. 1

Virginia lawmakers balanced issues in regards to the option of small-dollar credit because of the urgency of stopping lending that is harmful, a challenge that officials various other states likewise have struggled with. Continue reading Just how Virginia’s 2020 Fairness in Lending Act Reforms Small-Dollar Loans