RICHMOND, Va.--(BUSINESS WIRE)--Continuing his three year effort to address Virginia’s current unregulated rate law for consumer installment lending, State Senator Scott Surovell (D-Mount Vernon) has introduced Senate Bill 33 (“SB33) for the 2020 session. SB33 represents an ongoing effort to cap the state’s unregulated consumer finance code (Chapter 15) with a 36% rate ceiling, along with other important consumer protections.
Jeff Smith, Director of the Virginia Financial Services Association, stated that, “Virginia’s current consumer finance laws permitting unregulated interest rates for loans greater than $2,500 has been used by high-cost lenders to the detriment of Virginians seeking credit for personal or household needs. Consumers seeking this type of credit should not be enticed into paying wealth stripping rates that often exceed 100% during their time of need from high-cost lenders promising quick cash and easy approvals.”
“We are pleased with Senator Surovell’s strong commitment to continue his efforts in supporting reasonable and responsible guidelines to our State’s long standing Consumer Finance Act,” stated Chris McKinley, SVP of Lendmark Financial Services. McKinley noted that VFSA members have been actively supporting Senator Surovell’s legislative efforts to close this high cost rate loophole Under Chapter 15 for the past two years. “There is a simple truth for our community based, brick and mortar traditional installment loan members. Our loans are underwritten and approved based on the ability to pay and a household’s budget needs. The only financial incentive we have is a successful borrower repayment.”
Virginia has seen a growing threat of high-cost lenders pushing extreme, 100% or higher interest cost loans on vulnerable borrowers. Unfortunately, while the internet has made credit options more available, it has also exposed consumers to rates with crushing costs on loans in excess of $2,500 that are covered under Chapter 15 of the state’s current lending laws. For many Virginians, the thought of lenders charging interest of 100% or more on loans is simply unconscionable. Many agree that it places vulnerable families in crushing debt.
Stated McKinley, “There is simply no benefit to either consumers seeking credit in time of need or our State’s role in ensuring access to responsible credit in allowing such exorbitant rates for these larger personal loans. It is why members of the VSFA have been actively supporting the 36% rate ceiling for the last two sessions and we look forward to continuing supporting efforts that promote accessible and affordable consumer credit for all Virginians.”
Smith, who has led the Lender’s Association for over 40 years, reinforced his members’ position on the subject: “This sensible approach for a reasonable rate ceiling will strengthen the most important attribute for a strong and vibrant consumer credit market in Virginia, especially given potential changes with other credit options in the State. We have always supported efforts to promote a mutually beneficial alignment of interest between borrowers and lenders and we believe strongly that SB33 will do just that.”
Contacts to the Virginia Financial Services Association may be made by emailing Jeff Smith IV at firstname.lastname@example.org or calling 804-353-2322. Contacts to Lendmark Financial services may be made emailing Chris McKinley, SVP – Government Affairs, at email@example.com or calling 336-263-6992.