Please call Governor Tim Kaine and ask him to improve it
The Virginia legislature has just passed a payday lending bill that slightly improves the current law permitting predatory lending in Virginia.
Governor Kaine can offer amendments to the bill that could truly break the cycle of debt.
Please call Governor Tim Kaine at 804-786-2211 and ask him to strengthen House Bill 12 and Senate Bill 588 on payday lending. Ask him to offer amendments that would give more protections to borrowers.
Why?
* The number of loans that people can get under the new bill far exceeds the number of true emergencies that one would likely have in a year. Someone paid on a weekly basis could get up to 15 loans in a year, someone paid on a bi-weekly basis up to 10 loans in a year, and someone paid monthly (social security; disability; veterans benefits) can get up to 6 loans per year.
* The cost of the loan to borrowers is almost as high as the current predatory fees.
Here are the main provisions of the new legislation, and what it may mean for borrowers beginning next year:
* One loan at any one time from any lender industry-wide – no more multiple loans all at the same time! A good thing.
* The cost to the borrower is only slightly lower than the current loan cost, because of a combination of factors:
--36% APR on the principal of the loan
--A fee of $20 for every $100 borrowed.
--$5 verification fee, only $1.00 of which goes to pay for the database itself.
* The loan term is now two times the borrower’s pay cycle - they get two paychecks to pay back the loan. This allows borrowers to spread their payments over two pay periods and gives them more time to pay back the loan. A good thing.
* An extended payment plan on any loan, but limit of 1 per year – This allows a 60 day payback period with a 90 day lockout from getting a new loan after that. Based on experience in other states, the industry knows how to make sure that few borrowers use this extended payment plan.
* If the borrower gets 5 loans in a 180 day period, their 5th loan comes with a choice:
--They will pay off the loan in full, and then be locked out of borrowing for another 45 days OR
--They will go into an extended payment plan with four equal payments across 60 days, and then a 90-day lockout period.