by Tram Nguyen, Co-Executive Director, New Virginia Majority
For years, our communities have been calling for sensible action to address unchecked predatory lending all across Virginia. Thankfully, we now have a chance to make that a reality. Recently, the House passed comprehensive legislation to reform high-cost lending, protect consumers and maintain widespread access to credit. The vote was across party lines 65-33.
And on Tuesday, thanks to the votes of Sens. Lucas, Edwards, Deeds, Barker, Marsden, Ebbin, Howell, Vogel, Locke, Petersen, and McClellan on SB421, lawmakers are on the brink of closing all the loopholes that lenders use to trap Virginians in high-cost debt. Those Senators deserve recognition for seeing through the industry’s attempts to confuse the issue and slow down a carefully crafted bill that has the support of community organizations, the Virginia Legislative Black Caucus, the Attorney General, the Governor, and even some lenders.
Fairness in lending is not a partisan issue. Comprehensive reform has strong support from Republicans and Democrats alike who recognize today’s status quo for what it is — a failure and a deep injustice that has lasted for far too long. In Richmond, representatives of high-cost lenders are busy claiming that the sky will fall when the bill passes, even as some of the very same companies operate under similar reforms in other states. For example, the largest lender in the country, headquartered in South Carolina, charges Virginians $1,400 in fees and interest alone to borrow $1000 for one year, and can take access to a borrower’s car title as collateral. Similar outlandish fees are charged in Ohio, Colorado and elsewhere. In Ohio, where they are the largest lender in the state, this company charges $536 for the same loan without collateral. They also operate stores in Colorado, where they charge $320 to borrow $1,000 for 1 year, or more than 4 times less than they charge in Virginia. It’s hard to believe any legislators could be comfortable with large out-of-state companies charging Virginians 3-4 times more than they do in other states.
It’s no surprise payday and title lenders are deeply unpopular with Virginia voters; it’s time for lawmakers to stand with those they represent and reform debt-trap lending. Virginia voters speak with a unified voice on this issue. The overwhelming majority — 84% — want to see loan prices capped at levels lower than today’s average APRs of 251% for payday loans and 217% for title loans.
Struggling consumers have been waiting long enough. Every day without reform enables high-cost lenders to siphon well over $200,000 in excessive interest and fees out of the pockets of hard-working Virginians. The time has come: when the full Senate debates and votes on SB421 in the coming days, they will have a chance to protect the most vulnerable in our communities by passing this important bill and ensure fair lending without debt traps.