Payday Loans - States Are Cracking Down on Loan Sharking
Cash Now Promise of Lawsuit Loans Under Fire
We’ve all seen the commercials promising cash in the form of a lawsuit loan. Payday Loans often charge similarly outrageous fees and their loan interest rates can only be characterized as Loan Sharking. These types of loans carry extremely high interest rates and other high fees. Many people had been taken advantage by signing up for these types of fraudulent lines. The US Chamber’s Institute for Legal Reform has said that the lawsuit lenders charge sky-high interest rates on these loans often more than 100% annually. Government officials are expected to crack down on these types of predatory lending within the next year.
Since January 2013, at least 20 bills have been filed in state legislatures across the country in an attempt to regulate this industry.
In Virginia, payday loans are regulated more strictly than in many states, but that does not mean that they are a good deal. Virginia requires the loan to be at least 7 days duration. Fees cannot exceed 15% of the loan amount. Only one 6% late fee can be charged.
In Virginia payday lenders must have a state license, even if they are located in other states. Often, Payday lenders offer online loans from out of state to avoid the state regulatory process. Also, in Virginia, Payday lenders cannot:
- Make more than one loan to a borrower at any time;
- Renew or extend any loan;
- Lend to military personnel located in certain locations declared ‘off-limits’ by a military base commander;
- Garnish military wages or conduct collection activities when the borrower is deployed to a combat or a combat support post.