The Pew Charitable Trusts recently released an alarming new study on payday and title lending practices in Virginia and the associated harm caused to consumers. The study finds that hundreds of thousands of Virginia borrowers, who typically use these small loans to cover normal expenses like rent, mortgage payments, groceries, and utilities, are exposed to higher costs and more risk than their counterparts in nearly every other state.
Compared to other states, Virginia has unusually weak consumer protection laws pertaining to payday and vehicle title loans. This allows lenders, many of which are owned by out-of-state companies, to charge Virginia borrowers up to three times more than they charge borrowers in other states for the same type of loan.
Lenders in Virginia can issue loans under any of four statutes, two of which allow borrowers to be charged unlimited interest. Other states have taken action to make payday and car title lending more affordable. Pew estimates that Virginia policymakers could save families more than $100 million annually by taking similar action. Importantly, these savings would matriculate back into the state’s economy rather than accruing as profit to unlicensed, out-of-state companies.
Despite a regulatory environment that clearly favors lenders, Kelly Guzzo has been successful in leveling the playing field for many clients caught in the trap of high-cost loans. If you have suffered harmful consequences as a result of taking out this type of loan, please contact our office to discuss whether we can help.