Payday lenders in Virginia won't have to
limit interest rates on loans.
A House of Delegates committee killed a proposal today that
would have limited high-interest, short-term payday loans to the
same 36 percent annual interest rate cap that applies to other
lenders in Virginia.
The measure would have repealed the 2002 law that exempts payday
lenders from that cap.
The Commerce and Labor Committee voted 10-to-8 against the bill.
Critics say borrowers often get trapped in a cycle of debt as
they repeatedly renew their loans or borrow from one payday lender
to pay off another. Those loans have average annual interest rates
that can go above 300 percent.
Representatives of the payday loan industry said such a bill
would have forced them out of business. And they say their loans
can be less expensive than fees for bounced checks or late credit