Just Exactly How Virginia’s Fairness in Lending Act Reforms loans that are small-Dollar

Just Exactly How Virginia’s Fairness in Lending Act Reforms loans that are small-Dollar

After several years of legislative efforts to foster a safe and viable marketplace for tiny 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 re re re payments, referred to as balloon re re payments, and reduce rates. The legislation rationalizes just exactly just what was a disparate regulatory framework, governed by a patchwork of legislation that allowed payday and automobile name loans with unaffordable re re payments and needlessly high expenses, and uncovered borrowers to monetary damage, including duplicated borrowing and high prices of automobile repossession. Past research by The Pew Charitable Trusts revealed that prior to the reforms, businesses routinely charged Virginians 3 x a lot more than clients in lower-cost states. 1

Virginia lawmakers balanced issues in regards to the accessibility to small-dollar credit using the urgency of stopping harmful financing techniques, a challenge that officials in other states also provide struggled with. Virginia’s approach that is evidence-based on effective reforms formerly enacted in Colorado and Ohio that maintained extensive use of credit and measurably enhanced customer outcomes by closing loopholes, modernizing outdated statutes, and prohibiting balloon re payments. (more…)

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