Virginia Payday Loan Law and Legislation

For about a century, Virginia had “a separate license for consumer finance loans to allow small, low-interest loans” and only in the recent decade payday and title lenders discovered this license and started to use it to charge triple-digit interest rates. In 2009, the state took restrictive measures and capped payday loan APR at 36%. However, this measure helped very little and the real situation hasn’t changed much as in the light of the looming federal payday loan regulations, “many companies began entering into contracts with Native American tribes to provide loans to consumers over the internet” (By State Sen. Scott Surovell (36th)). Thus, in many cases payday loans were an expensive option to resort to with the annual interest reaching 601%* in some cases. In 2020 Virginia enacted the law and capped the interest and fees.

Virginia Payday Lending Statutes

In the state of Virginia payday lending is legal according to Va. Code Ann. §§ 6.2-1800 et seq.  

In order to operate in the state, payday lenders are required to obtain a license with the Virginia State Corporation Commission regardless of a lender’s physical presence or absence in the state.

There are online lenders that offer payday loans to residents of Virginia, however, payday loans “made by companies who do not have a physical location in Virginia” are illegal in Virginia.

In order to do so legally (and charge APRs in excess of 12%), online lenders have to obtain a Consumer Finance License, yet, currently, there are no internet lenders with such a license in Virginia, thus, any online payday loan practices refer to a Class 2 misdemeanor and any loan agreement would be considered null and void.

Also, only payday lenders with a certain bond in possession can obtain and maintain a license to operate in Virginia.

Here, there is a full “list of companies licensed to conduct payday lending business” in Virginia (as of February 3, 2021).

Loan Amount in Virginia

Rates, Fees and Other Charges in Virginia

• “A licensee may charge and receive on each loan interest at a simple annual rate not to exceed 36 percent.” (Code Ann. §6.2-1817.1)
• Plus, a maintenance fee (monthly) is not more than 8% (or $25) of a loan amount.
• A return fee is not more than $25.
• A late fee is not more than $20.

How Much Would a $100 Payday Loan Cost? (Use Calculator)

With minimum 4 months term:
ARP: 264.1%
Loan cost: $86.83
To return: $186.83

Cost calculation:
36% / 365 days * 120 days (4 months) = 11.83%
11.83% of $100 loan = $11.83 (interest)
$75 (maintenance fees for 4 months (3 times))
$11.83 + $75 = $86.83 Loan cost

ARP сalculation:
$86.83 / 120 days = 0.72 * 365 days = 264,1% ARP

The Loan Term in Virginia

In accordance with Code Ann. §6.2-1816.1,

• The minimum term should not be less than 4 months (it can be less only under one condition: total monthly payment on the loan is not more than 5% of gross monthly income or 6% of the net monthly income);
• The maximum term is 24 months.

Consumer Information

Attention
From July 2020, lenders are not required to check a borrower’s ability to repay a loan.
Be careful, evaluate your financial situation, don’t get into a debt trap.
The rule was changed by the CFPB.

• Criminal charges are prohibited in the state of Virginia;
• The consumer can cancel the loan within 3 days;
• “A licensee or affiliate shall not knowingly make a payday loan to a person who is a member of the military services of the United States or the spouse or other dependent of a member of the military services of the United States.” ( Code Ann. §§ 6.2-1800 et seq.)
  

Virginia State Corporation Commission is the official body that regulates the payday lending industry in the state of Virginia.

Borrowers who suffered from the illegal actions of payday lenders can file a complaint on their website.

Regulator: Complaints & Information

Virginia Bureau of Financial Institutions

Address: Tyler Building, 8th floor, 1300 E Main St #800, Richmond, VA 23219
Phone: 804-371-9967 or 800-552-7945 (toll free)
Url: http://www.scc.virginia.gov/bfi/
File a Complaint: https://www.scc.virginia.gov/pages/File-Complaint-Consumers

Submit a Complaint to the CFPB

Number of Virginia Consumers Complaints by Topics

According to CFPB Consumer Complaint Database

• Charges from account ( 221 )
• Fraud and threat ( 207 )
• Not exiting debt ( 135 )
• Credit rating ( 48 )
• Loan to return ( 43 )
• Not requested loan ( 36 )
• Lender is not available ( 33 )
• Loan not received ( 14 )

The Quantity of Top Virginia Stores by Cities

Statistics

The History of Payday Loans in Virginia

• July 1, 2002 – The Legislation allowed payday lenders licensed by the State Corporation Commission (SCC) to open their businesses. Payday lending industry started to flourish.
• 2006 – the Military Lending Act effectively capped payday loans offered to the military at 36% APR. No lender in Virginia is now allowed to offer loans to the military in excess of 36% APR.
• 2009 – Virginia passed HB 12 Payday Loan Act and imposed payday lending restrictions (36%APR, max 20% loan fee). Those measures were aimed to protect Virginia customers and prohibit lenders from charging triple-digit APRs. However, lenders managed to find loopholes to go around the law.
• Illegal Internet payday lenders are one of such loopholes and the reason behind real triple-digit APR rates in the state.
• June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (the federal rule is expected in November 2020).
• 2020 – New legislation (HB 789) was enacted: interest and fees < 36%, max loan amount < $2500, loan terms are 4 months (min) and 24 months (max).

[Updated As of February 2021]