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Exactly Exactly How Virginia’s 2020 Fairness in Lending Act Reforms Small-Dollar Loans

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Legislation closes regulatory loopholes, caps rates of interest, and offers classes for any other states

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Overview

After several years of legislative efforts to foster a safe and viable marketplace for small loans, Virginia lawmakers in 2020 passed bipartisan legislation—the Fairness in Lending Act (S.B. 421/H.B. 789)—to prohibit loans with big last re re payments, referred to as balloon re payments, and reduce rates. The legislation rationalizes just just what was in fact a disparate regulatory framework, governed by a patchwork of rules that permitted payday and automobile name loans with unaffordable re payments and needlessly high expenses, and uncovered borrowers to economic damage, including repeated borrowing and high prices of automobile repossession. Previous research because of The Pew Charitable Trusts revealed that prior to the reforms, businesses routinely charged Virginians 3 x more than clients in lower-cost states. 1

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