Payday Loan in Virginia
Legal Status: Legal
Citation:
Va. Code Ann. § 6.1-444 et seq.
Loan Terms:
Maximum Loan Amount: $500
Loan Term: Min: 7 days
Maximum Finance Rate and Fees: 15%
Finance Charge for 14-day $100 loan: $15
APR for 14-day $100 loan: 390%
Debt Limits:
Maximum Number of Outstanding Loans at One Time: Not Specified
Rollovers Permitted: None (cannot refinance, renew, or extend)
Cooling-off Period:
Repayment Plan:
Collection Limits:
Collection Fees: $25 NSF fee; Court Costs; Reasonable Attorney’s Fees (not to exceed $250)
Criminal Action: Prohibited
Where to Complain, Get Information:
Regulator: Virginia Bureau of Financial Institutions
Address: State Corporation Commission, 1300 East Main Street, Suite 800 Post Office Box 640 Richmond VA 23218
Phone: (804) 371-9657
Fax: (804) 371-9416
Applicability: Payday lenders. Otherwise Consumer Finance Act applies. Va. Code Ann. § 6.1-272.1 (36% per year for loans of up to $2,500). Va Code Ann. § 6.1-432 et seq. (prohibiting check cashers from cashing post-dated items, other than government or payroll checks).
Exemptions: Banks, savings institutions or credit unions that do not become licensed under this chapter.
Licensing requirements: Payday lenders must apply for licenses and pay an application fee of $500. Lenders must also file a bond file with the Commissioner in the sum of $10,000 per location, not to exceed a total of $50,000. Applicants must have unencumbered liquid assets per location available for the operation of the business of at least $25,000. Each license shall be prominently posted in each place of business of the licensee. Licenses shall not be transferable or assignable.
Required disclosures: Each payday loan shall be evidenced by a written loan agreement, which shall be signed by the borrower and a person authorized by the licensee to sign such agreements and dated the same day the loan is made and disbursed. The loan agreement shall set forth, at a minimum: (i) the principal amount of the loan; (ii) the fee charged; (iii) the annual percentage rate in accordance with Federal Reserve Board Regulation Z; (iv) evidence of receipt from the borrower of a check, dated the same date, as security for the loan, stating the amount of the check; (v) an agreement by the licensee not to present the check for payment or deposit until a specified maturity date, which date shall be at least seven days after the date the loan is made and after which date interest shall not accrue on the amount advanced at a greater rate than six percent per year; (vi) an agreement by the licensee that the borrower shall have the right to cancel the loan transaction at any time before the close of business on the next business day following the date of the transaction by paying to the licensee, in the form of cash or other good funds instrument, the amount advanced to the borrower; and (vii) an agreement that the borrower shall have the right to prepay the loan prior to maturity by paying the licensee the principal amount advanced and any accrued and unpaid fees. The licensee shall give a duplicate original of the loan agreement to the borrower at the time of the transaction and provide each borrower with a pamphlet, in form consistent with regulations promulgated by the Commission, explaining in plain language the borrower’s rights and responsibilities and providing a toll-free number at the Commission for assistance with complaints. A licensee shall provide a clear and conspicuous printed notice to the borrower indicating that a payday loan is not intended to meet long-term financial needs and that the borrower should use a payday loan only to meet short-term cash needs. Each licensee shall conspicuously post in its licensed location a schedule of fees and interest charges.
Loan terms: Payday loans with any one licensee cannot exceed the principal amount of more than $500. A borrower shall be permitted to make partial payments, in increments of not less than $5, on the loan at any time prior to maturity, without charge. The licensee shall give the borrower signed, dated receipts for each payment made, which shall state the balance due on the loan.
Special protections for members of the military: If the borrower is a member of the military services of the United States or the spouse of a member of the military services of the United States, the licensee shall not: garnish any military wages or salary; not conduct any collection activity against a borrower who is a member of the military services of the United States or the spouse of such a member, when the member has been deployed to a combat or combat support posting or is a member of the Reserves or National Guard and has been called to active duty, for the duration of the deployment or active duty service; contact the commanding officer of a borrower who is a member of the military services of the United States or anyone in the borrower’s chain of command in an effort to collect on a loan made to the member or the member’s spouse; make a loan to a member of the military services of the United States if a military base commander has declared that a specific location of the licensee’s business is off limits to military personnel. Such licensees shall be bound by the terms of any repayment agreement that the licensee negotiates with respect to such borrower through military counselors or third-party credit counselors.
Permitted charges: A licensee may charge an amount not to exceed 15% of the amount of the loan proceeds advanced to the borrower; any deposit item return fee incurred by the licensee, not to exceed $25, if the check given by the borrower as security is returned because the account on which it was drawn was closed by the borrower or contained insufficient funds, or the borrower stopped payment on the check; and, if judgment is obtained against the borrower, court costs and reasonable attorneys’ fees if awarded by the court, incurred as a result of the returned check in an amount not to exceed $250.
Prohibited Acts: A licensee shall not obtain any agreement from the borrower (i) giving the licensee or any third person power of attorney or authority to confess judgment for the borrower; (ii) authorizing the licensee or any third party to bring suit against the borrower in a court outside the Commonwealth; or (iii) waiving any right the borrower has under this chapter. A licensee shall not require, or accept, more than one check from the borrower as security for any loan at any one time. A licensee shall not refinance, renew or extend any loan. A licensee shall not cause a borrower to be obligated upon more than one loan at any time for the purpose of increasing charges payable by the borrower. A licensee shall not require or accept a post-dated check as security for, or in payment of, a loan. A licensee shall not threaten, or cause to be instigated, criminal proceedings against a borrower if a check given as security for a loan is dishonored. A licensee shall not take an interest in any property other than a check payable to the licensee as security for a loan. A licensee shall not make a loan to a borrower to enable the borrower to pay for any other product or service sold at the licensee’s business location. A check given as security for a loan shall not be negotiated to a third party.
Enforcement: License suspension and revocation; cease and desist orders. If the Commission determines that a person is in violation, or has violated, any provision of this chapter, the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations. In the case of such referral, the Attorney General is hereby authorized to seek to enjoin violations of this chapter. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law. The Attorney General may also seek damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law. Persons entitled to any relief as authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice. In any action brought by the Attorney General by virtue of the authority granted in this provision, the Attorney General shall be entitled to seek reasonable attorney’s fees and costs. Any violation of the provisions of this chapter shall be subject to the enforcement provisions of the Virginia Consumer Protection Act.
Penalties: The Commission may impose a fine or penalty not exceeding $1,000 for violations of these provisions. Criminal penalties are also available.
Private right of action: Any person who suffers loss by reason of a violation of any provision of this chapter may bring a civil action to enforce such provision and, if successful, recover reasonable attorney’s fees, expert witness fees and court costs incurred by bringing such action.
