Virginia Lawmakers Pass Car Title Lending Reform

New York Times
March 11, 2010

A bill passed in the Virginia Senate by a 36-4 vote will regulate car title lenders by setting a one-year limit on loans, capping the interest rate, and requiring lenders to be licensed. The measure permits lenders to charge between 15 percent and 22 percent monthly interest depending on the amount of the loan. It forbids them, meanwhile, from lending more than 50 percent of the value of the vehicle put up as collateral and requires that borrowers own the vehicle. Additionally, loans must be repaid in full within a year, while at least 8.25 percent of the principle must be paid monthly. Changes made by the House allow lenders to continue charging interest to people who were in default for more than 60 days while trying to hide the vehicle and require that the lender pay the costs associated with repossession if it does not give 10-day written notice that it plans to take the vehicle. According to an industry lobbyist, car title lenders support the compromise; and consumer advocates tout it as a step forward. "Although we were disappointed in the very high interest rate cap, we think this is a significant improvement," stated Jay Speer of the Virginia Poverty Law Center.
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