The State of Virginia joined a growing list of States with new payday loan regulations with a new law that went into effect on January 1, 2009. The Virginia law is the culmination of 3 years of debate by State legislators. The law limits borrowers to one payday loan at a time, and extends the length of time borrowers have to repay each loan, effectively limiting the number of loans each borrower can receive each year.
Although the law was passed earlier in 2008, it only went into effect on Jan. 1 so that there would be enough time to set up a State-wide database to track loans.
Virginia took a slightly different approach to regulating payday loans than other States in the South East. Other States have enacted interest rate caps, while Virginia adopted an approach of capping the number of loans. Stay tuned to see which approach works better.
A number of payday lenders have already taken moves to change their mode of operation to avoid the legislation.
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