A licensed lender in Richmond which issues consumer lending, such as payday loans. Photo by Emma Gauthier, Capital News Service.
Del. Mark Levine recalls receiving a $1,000 loan offer from a company with a 299% interest rate buried deep in the fine print.
“As the company compounds daily at this interest rate, this loan would cost anyone desperate enough to accept this offer more than $20,000 in interest and fees if they were to try to pay the $1,000 loan back in full just one year after receiving it,” Levine, a Democrat from Alexandria, stated in a newsletter.
If the loan was left for two years untouched, the interest cost would have risen to a staggering $400,000, Levine said.
In an effort to fight predatory lending, loans with unfavorable terms to the borrower, the House of Delegates and Senate each voted recently to pass bills that will alter laws related to consumer lending. That includes payday loans, which would be renamed short-term loans, car title loans and open-end credit, such as credit cards and other lines of credit.
