Payday lending regulation back on the table

Local, Payday lending, Politics, Virginia 1 Minute

Del. Glen Oder (R-NN) has introduced a bill calling for a 36% cap on interest rates for payday lenders. I’m not going to rehash all I’ve written about payday lending; suffice it to say that putting these lenders under the same regulation as other lenders is a step in the right direction.

Contact your legislators, ask them to sign on as a patron of this bill and ask them to support it.

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37 thoughts on “Payday lending regulation back on the table”

  3. We really shouldn’t be treating adults like children in this way. Let them make their own decisions and keep big brother out of it.

  4. Brian – all well and good – except the government interjected itself into the conversation when they allowed payday lending. Putting the cap back on simply puts things back where they were before.

    James – I’ve seen car loan documents with that interest rate on them. Surprised me the first time I saw it, probably 25 years ago. I agree – it is usurious.

  5. Vivian,

    I think that our fundamental difference is that I don’t see why payday lending should have to be allowed by the government. I really don’t think that they should need permission to be in business.

  6. Virginia has a law that limits interest rates. This law neither allows or prohibits payday lending. What VA did with the payday lending law was to allow a particular industry to not be subject to the usury law. Oder’s bill will put payday lenders back in the same position as they were before – neither prohibited nor allowable.

    Now, you might argue that there shouldn’t be usury laws, but that’s another whole argument and not a part of what the GA is considering.

  7. Keep in mind that a 36% interest rate will not make payday loans cheaper, it will make them unavailable. With their very short terms and high risk, they are not profitable at normal interest rates.

    You are taking away the lender of last resort for those about to be evicted, or have a car repossessed, or facing some other financial emergency.

    So, if you are determined to protect people from their own errors in misusing these loans, also be prepared to bear the responsibility for the hardships you will bring to those on the financial margins who use them responsibly.

  8. Y’all are funny. Before 2002, there were no payday lenders. If, after 5 years, more people are in more debt, the experiment has failed. The hardships that existed before payday lending have been exacerbated by it.

    Again, if someone wants to argue that usury rates not be set, go for it. (And I would expect such an argument from libertarians.) But there is no justification for what amounts to state-sponsored ripping people off.

  9. Interesting that Oder took money from the payday lenders for his campaign and in fact the Virginia Senate Republican Leadership Trust took a ton of money. Check VPAP if you don’t believe me.

    Something smells in Richmond. Its a Glenn Oder!

  10. “Y’all are funny. Before 2002, there were no payday lenders.”

    Nonsense — they were just called “loan sharks” back then, and their collection methods were no more legal than their loans.

  11. “But there is no justification for what amounts to state-sponsored ripping people off.”

    The state is paying “payday lenders”? That’s news to me.

  12. Don’t be dense, Mouse. The state created the payday lending industry in Virginia. Prior to the passage of the law in 2002, there was no incentive for the vultures to be here. So yes, the state sponsored it.

  13. No, the state SANCTIONED it, not SPONSORED it.

    And yes, there WAS incentive for the vultures to be here. The 2002 law did not create the demand for payday loans, it only allowed the demand to be satisfied legally, rather than illegally.

    I also suspect the payday lenders charge lower interest rates than loan sharks did.

  14. In the end, I think this comes down to whether we believe in Liberty or not.

    Freedom means being able to choose, even when we choose unwisely. What you advocate is to deny people choices you see as unwise.

    That is something parents do, but it is not a proper role of government unless you see government as some sort of collective Mommy and your fellow citizens as helpless children.

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