Payday Loans

Virginia Payday Loan Laws

Payday lending programs are legal as per Virginia payday loan laws. The relevant citation is Va. Code Ann. 6.1-459 et seq. Though some sincere efforts have been made to protect consumers from the risks of payday loans, such as by prohibiting automatic rollovers, no efforts have been made to reduce the rate of interest. Lenders in this state are freely charging 3-diigit APR (annual percentage rate), which is usually as high as over 600% per annum. It is quite obvious that despite a few restrictions that have been imposed on payday loan companies in the state of Virginia, short-term cash advances still do not make a wise financial option. Though anyone can qualify for it easily, it is going to be very expensive. Therefore, it is always better to avoid these types of easy yet risky loans. However, if you are anyways considering borrowing a payday loan or if you are already trapped in payday debt, make sure you are thoroughly aware of what the state laws have to say about it. The more you are informed about your rights and legal options, the better you will be able to protect yourself.

Criminal Lawsuits Not Permitted

Virginia payday loan laws do not allow lenders to file criminal lawsuits against debtors if they are unable to pay off the loan. However, payday lenders are permitted to file civil lawsuits. There is no way you can be sent to jail for non-payment of payday debt in the state of Virginia. In the most extreme cases, the judgment in a civil suit may include a forced wage garnishment or sale of certain assets. But, it is important for you to keep in mind that such actions can be taken against you only through a trustee appointed by the court (not by your lender).

Collection Charges

Virginia payday loan Lenders cannot charge more than $25 as NSF (Non-sufficient fee) fee. They are also allowed to charge up to $250 as attorney’s fee. Besides that, if certain court costs are applicable, that can also be charged to the debtor’s loan account.

Repayment Plan

As per Virginia payday loan laws, those debtors who are unable to make the repayment within the set time limit must be offered an affordable repayment plan (in small installments). The laws however do not specify the exact terms and conditions of repayment plans. Debtors are free to make a proposal to the lender. On the other hand, lenders get the liberty to either accept the offer or offer a counter plan. Overall, things very much depend on how efficient the debtors are in negotiations. It is also important to note that any individual debtor cannot qualify for a repayment plan more than once within a year. The good news is that no further interest can be charged for the extended period of time offered to the debtor as part of the repayment plan.

Cooling-Off Period

There are also provisions for a cooling-off period under Virginia payday loan laws. If you have been offered a repayment plan to pay off a previous loan, you can qualify for another payday loan only after ninety days. Besides that, if it is the fifth time you are borrowing a short-term cash advance, you will have to wait for at least forty-five days from the date you repay that loan in full in order to qualify for another payday loan. The laws also require lenders to wait for at least one day from the date of repayment before issuing another loan to the same borrower who have already borrowed one, two, three or four loans.

No Extension Of Due Date, No Rollovers, No Renewals, No Refinance

State laws strictly prohibit lenders from any activities to extend the due date of the loan if the borrower fails to pay off the loan within the set time limit. Activities like automatic refinance, renewals, or rollovers are not permitted in this state. In case of non-payment of debt, lenders can choose one of the two options – they can either offer an affordable repayment plan to the debtor or send the loan account to collection status and take civil actions against the borrower.

Maximum Amount And Number Of Loans

As per Virginia payday loan laws, an individual borrower cannot have more than one outstanding loan at one time. Besides that, the laws also specify that the maximum amount of loan must not exceed $500. If a lender knows that you already have one outstanding loan in your name and still issues a second loan to you, it will be considered as a fault on part of your lender. You have the right to file a complaint against that lender.

Interest And Other Charges

The maximum interest that can be charged by Virginia payday loan lenders is 687.76% per annum. The finance rate and fees on every $100 of loan issued for a 14-day period are applicable in the following manner – twenty percent of the total amount of loan issued + $5 as verification fee + a flat 36% annual interest + additional finances charges up to $26.38.

Minimum Repayment Period

The minimum repayment period must not be less than two pay periods in any case.

Right To File Complaints

If you find that any payday lender is not following the Virginia payday loan laws, you can contact the Virginia Bureau of Financial Institutions and file a complaint. You can contact them through fax at (804) 371-9416 and through phone at (804) 371-9657. Their office is located at State Corporation Commission, 1300 East Main Street, Suite 800 Post Office Box 640 Richmond VA 23218.


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