The Bureau of Financial Institutions reports that over 3.5 million payday loans were made to 433,537 borrowers in 2006 and that is just in Virginia!

Those 3.5 million loans were made from 791 payday loan locations in Virginia (that’s TWICE more payday loan shops than McDonalds restaurants!). 

The Virginia General Assembly passed a Bill authorizing payday lending in 2001. This legislation prohibits payday lenders from renewing, refinancing, or extending a payday loan.  It also prohibits lenders from making more than one loan at a time to a borrower.  However despite these prohibitions, many Virginia borrowers are, in effect, renewing their loans and getting more than one loan at a time:

• Many borrowers get back-to-back loans.  The borrower pays off his loan and then immediately gets a new loan.  Often, the borrower does this repeatedly.  A report done by the Bureau of Financial Institutions indicates that the average number of loans per borrower is 8.  But for 96,831 Virginians, 8 loans could not free them from the debt trap, and they sank deeper still, taking out 13 or more loans in 2006!

• The borrower goes to a second payday lender for a loan to pay-off his first loan and eventually winds up with two, three or more outstanding loans at the same time.  A study funded by the payday industry trade group reported that payday customers use an average of 1.7 different payday lenders per year.

Payday lenders currently charge over 360% APR interest and while they are willing to have weak reforms placed on them they are unwilling to lower their interest rates to 36%. We believe that 36% is enough!