Laws Cut Down Current Payday Loans, Rates

According to a story published in yesterday's Daily Press "last year, Virginia's payday lenders made nearly 3.4 million payday loans, or about 281,000 each month. Through the end of May, lenders had issued 226,807 loans, an average of 45,000 per month a 84 percent decline, according to the Bureau of Financial Institutions."

From 3.4 millions the VA payday loans the number of cases have fallen to 600,000 this year since the lenders were authorized to do business in the state in 2002.

The reforms in regard to payday loans came after years of infighting among legislators who argued that lenders prey on the vulnerable and those who didn't want to take away the fast-cash option for those who didn't qualify for traditional credit.

Now, according to the reform the payday loans can be issues one at a time per borrower and the later has the double of the amount of the time that he or she is required to pay the debt back to the lender.

Before the payday loans reform, lenders charged $15 per $100 loaned, and it was due on the borrower's next payday. This, of course, pushed up the interest rates and forced the borrower to take several loans to pay back the original payday loan. This made is very difficult for the borrower to manage his or her debt. Now that has changed.

This change drove many lender who specialized in payday loans out of state. For example, Mason, Ohio-based Check 'n Go, closed its 68 Virginia stores earlier this year.

As of June 16, there were 526 payday loan stores in Virginia, down from a high of 832 in 2007.