Friday, December 4, 2020
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Tag: excessive loan interest

Loan Sharking: Alive and Well in Virginia

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Well, well, well. We are supposed to feel really good because on October 1 Virginia is finally going to "regulate" car title lenders, those leeches who give some poor guy down on his luck money in return for the title to his vehicle, which they can then repossess and sell at auction when the poor guy can't pay the exorbitant interest rate charged on the loan. To call the law that passed in Virginia regulation is a joke. There is absolutely nothing in it for the lenders to worry about. Why should there be? They helped write it, but more on that later.

The bill introduced by Dick Saslaw (D-Springfield) to regulate car title loans still means that companies in that sleazy business can charge interest of 22% per month on the outstanding balance of a loan for $700 or less. Plus, the law puts no cap on the size of the loans. Lenders are at least barred from continuing to charge interest on a loan after they repossess a vehicle or going to court to seek a "deficiency judgment" after they take someone's vehicle and sell it.

According to Richmond Sunlight,  

Under this measure, if the loan balance is not paid in full within a 25-day grace period (in which case interest does not accrue), interest shall not exceed 22 percent per month on the portion of the outstanding balance of the loan that does not exceed $700; 18 percent per month on the portion between $700 and $1,400; and 15 percent per month on the portion that exceeds $1,400. There is no cap on the size of such loans. Money advanced under the loan agreement is required to be repaid in monthly payments over the 12 months following an advance.

Perhaps an actual example can show us just what a scam this kind of loan is.