SB 421

Abstract

Consumer lending. Replaces references to payday loans with the term "short-term loans." The measure caps the interest and fees that may be charged under a short-term loan at an annual rate of 36 percent, plus a maintenance fee; increases the maximum amount of such loans from $500 to $2,500; and sets the duration of such loans at a minimum of four months, subject to exceptions, and a maximum of 24 months. Short-term loan licensees are required to make a reasonable attempt to verify a borrower's income and may not collect fees and charges that exceed 50 percent of the original loan amount if such amount is equal to or less than $1,500 and 60 percent of the original loan amount if such amount is greater than $1,500. The measure amends the requirements for motor vehicle title loans, including requiring licensed lenders to use a database to determine a prospective borrower's eligibility for a loan and prohibiting loans to a borrower who has an outstanding short-term loan. The measure sets a 36-percent annual interest rate cap on open-end credit plans and allows a $50 annual participation fee. A violation of these provisions is made a prohibited practice under the Virginia Consumer Protection Act. The measure amends provisions of the Consumer Finance Act to, among other things, allow licensed lenders to use the services of access partners and establish requirements that loans be between $300 and $35,000; be repayable in substantially equal installment payments; have a term of no fewer than six and no more than 120 months; charge not more than 36 percent annual interest and a loan processing fee; and require licensees to post a bond. The measure prohibits credit service businesses from advertising, offering, or performing other services in connection with an extension of credit that has an annual interest rate exceeding 36 percent, is for less than $5,000, has a term of less than one year, or is provided under an open-end credit plan. The bill has a delayed effective date of July 1, 2021, and requires any person who would be required to be licensed under the provisions of the act to apply for a license by April 1, 2021. This bill is identical to HB 789.

Consumer lending. Replaces references to payday loans with the term "short-term loans." The measure caps the interest and fees that may be charged under a short-term loan at an annual rate of 36 percent, plus a maintenance fee; increases the maximum amount of such loans from $500 to $2,500; and sets the duration of such loans at a minimum of four months, subject to exceptions, and a maximum of 24 months. Short-term loan licensees are required to make a reasonable attempt to verify a borrower's income and may not collect fees and charges that exceed 50 percent of the original loan amount if such amount is equal to or less than $1,500 and 60 percent of the original loan amount if such amount is greater than $1,500. The measure amends the requirements for motor vehicle title loans, including requiring licensed lenders to use a database to determine a prospective borrower's eligibility for a loan and prohibiting loans to a borrower who has an outstanding short-term loan. The measure sets a 36-percent annual interest rate cap on open-end credit plans and allows a $50 annual participation fee. A violation of these provisions is made a prohibited practice under the Virginia Consumer Protection Act. The measure amends provisions of the Consumer Finance Act to, among other things, allow licensed lenders to use the services of access partners and establish requirements that loans be between $300 and $35,000; be repayable in substantially equal installment payments; have a term of no fewer than six and no more than 120 months; charge not more than 36 percent annual interest and a loan processing fee; and require licensees to post a bond. The measure prohibits credit service businesses from advertising, offering, or performing other services in connection with an extension of credit that has an annual interest rate exceeding 36 percent, is for less than $5,000, has a term of less than one year, or is provided under an open-end credit plan. The bill has a delayed effective date of January 1, 2021, and requires any person who would be required to be licensed under the provisions of the act to apply for a license by October 1, 2020. This bill is identical to HB 789.

Consumer lending. Replaces references to payday loanswith the term "short-term loans." The measure caps the interest andfees that may be charged under a short-term loan at an annual rate of 36percent, plus a maintenance fee; increases the maximum amount of such loansfrom $500 to $2,500; and sets the duration of such loans at a minimum of fourmonths, subject to exceptions, and a maximum of 24 months. Short-term loanlicensees are required to make a reasonable attempt to verify a borrower'sincome and may not collect fees and charges that exceed 50 percent of theoriginal loan amount if such amount is equal to or less than $1,500 and 60percent of the original loan amount if such amount is greater than $1,500. Themeasure amends the requirements for motor vehicle title loans, includingrequiring licensed lenders to use a database to determine a prospectiveborrower's eligibility for a loan and prohibiting loans to a borrower who hasan outstanding short-term loan. The measure sets a 36-percent annual interestrate cap on open-end credit plans and allows a $50 annual participation fee. Aviolation of these provisions is made a prohibited practice under the VirginiaConsumer Protection Act. The measure amends provisions of the Consumer FinanceAct to, among other things, allow licensed lenders to use the services ofaccess partners and establish requirements that loans be between $300 and$35,000; be repayable in substantially equal installment payments; have a termof no fewer than six and no more than 120 months; charge not more than 36percent annual interest and a loan processing fee; and require licensees topost a bond. The measure prohibits credit service businesses from advertising,offering, or performing other services in connection with an extension ofcredit that has an annual interest rate exceeding 36 percent, is for less than$5,000, has a term of less than one year, or is provided under an open-endcredit plan. The measure has a delayed effective date of January 1, 2021.