Thousands of Virginians depend on pay-day or car title loans to make ends meet; however, the interest rates on some of these loans are so steep.
The Attorney General has decided to intervene.
“It was just astronomical outrageous prices,” says Thomasine Wilson, who recently lost her job and thought a $200 pay-day loan seemed like a good idea. “Each time I had to pay that loan back, I had to get a loan to pay a loan, and by the time it got to the end of that year, it was over $500.”.
According to the State Corporation Commission, the average car title loan interest rate is 216%. The rate is even higher for payday loans at an average of 289%.
“For those consumers who end up in these loans, they are a huge issue , they can wreak havoc on their lives,” says David Silberman, with the Consumer Financial Protection Bureau.
Now the organization and the AG’s office wants to create tougher laws to protect customers, make it harder for companies to break those laws and they also want to educate consumers.
“Virginia is being referred to as the predatory loan capital of the east coast. That is a serious blemish on our reputation and more importantly, it means that a lot of Virginians are being hurt,” says Attorney General Mark Herring.
Also present at Thursday’s announcement were people who support title and pay-day lenders.
“During the time that it was very cold and I didn’t have enough money to pay my bills, so I went there, they gave it to me and I paid my bill,” say Patricia Bolden.
“I think everyone here can agree that what we want is for the borrower to be able to succeed in repaying the loan,” says Lisa McGreevy, the president and CEO of the Online Lenders Alliance.
The AG’s team is now working on the final plan which should be complete by May 1st.