Here’s what you need to know about payday loans in Virginia
If you’re short on funds and looking to borrow a small amount of cash to get by between paychecks, you might be considering a payday loan. This guide will help you navigate payday lending in Virginia.
What are the laws about payday loans in Virginia?
Payday lending is legal in Virginia. Virginia Code Ann. §§ 6.2-1800 et seq., titled payday lenders, governs all aspects of payday lending in the state. No business or individual can provide payday loans to residents of this state without obtaining a license from the Virginia State Corporation Commission. A lender can’t provide a payday loan online because the application requires individuals to hand over their bank account information–so avoid any lender that claims to offer an online loan.
Here are the basic rules surrounding payday loans:
- Maximum loan amount: $500
- Loan term: Two or more pay periods
- Total loans: You can only have one outstanding loan at a time
- Financing fees: 36% annual interest, a $5 verification fee and 20% of the principal
- Finance charge: A 14-day $100 loan costs $26.38
- APR: A 14-day $100 loan has an APR of 687.76%
- Collection costs: $25 non-sufficient funds (NSF) fee, court costs and reasonable attorney’s fees ($250 or less)
You can cancel your loan by repaying the total borrowed amount by the end of the business day after you receive your funds. This means if you borrow money on a Monday, you can cancel your loan until the lender closes on Tuesday.
Virginia lawmakers enforcing online payday loan lawsThere are lenders online that sidestep the law and offer payday loans to residents of Virginia. Lawmakers are rallying together to stop this predatory practice, but it helps to know that online lending is banned in the state. If you’re browsing online or comparing lenders, remember that you can’t apply, even if it’s more convenient. This will help enforce the laws and prevent you from taking out a loan with huge interest rates–and giving lenders access to your checking account.
Here are some lender options for payday loans
Check the websites of any providers you’re interested in to confirm they operate in Virginia. Remember that online lending is illegal in Virginia so you must visit a storefront if you want to take out a payday loan.
Here’s how Virginia residents can apply for payday loans
Applying for payday loan is easy, but they can be very expensive. Because of this, all lenders will require that you have a regular source of income, be at least 18 years old and a citizen or permanent resident of the US.
When you visit the lender’s storefront, you’ll need to bring proof of employment or benefits (if the lender allows it), proof of your address and a blank check. You’ll also need to know your Social Security number and be willing to fill out an application that asks for personal details.
Once you’re finished, an employee will process your application and you’ll know within a few hours if you’ve been approved for the loan.
What should I consider before taking out a loan?
Payday loans can be very expensive if you don’t plan for them properly. Because of this, they should be used as a last resort. If you have structural financial issues–that is, you’re constantly struggling to get by–you can apply for one of the many assistance programs in Virginia. Things like Energy Assistance, the Supplemental Nutrition Assistance Program (SNAP) and 2-1-1 VIRGINIA can all be helpful when you’re trying to balance your budget.
A payday loan can be a good way to afford unexpected expenses between paychecks. Knowing the laws will help you avoid disreputable lenders. Always be sure you can repay your loan, and don’t hesistate to ask questions or report illegal behavior when you see it.