RICHMOND, Va. (WRIC) — Virginia’s payday and title lending markets are one of the riskiest in the country, according to a new report.
Payday and title lender businesses are meant to help people in need with quick and easy money, but some faith leaders believe it is doing more harm than good. Fees and interest rates are leaving many Virginians deep in debt.
“It’s impacting families especially poor people and African Americans,” said Rev. Rodney Hunter, of Wesley Memorial United Methodist Church.
Rev. Hunter is part of the Virginia Faith Leaders for Fair Lending. The group is urging Virginia legislators to change the practices in the payday and title lending market.
According to Rev. Hunter, Virginia is the “capital of predatory lending.”
State laws allow lenders to charge Virginians up to three times more than residents in other states for the same types of loans.
“It’s an unending debt trap that most people will never be able to pay in most instances,” Rev. Hunter said.
An analysis done by PEW Research says many Virginia lenders operate stores and online without licenses, with interest rates that are often 299 percent or higher, plus additional fees. It also states Virginia is one of 11 states with no cap on interest rates for installment loans over $2,500.
Faith leaders say they’re not fighting lenders, they just want to see fair practices to help Virginians pay back their loans.
“It’s giving Virginia a bad name for harming those who can least afford it,” Rev. Hunter said.
Faith leaders want to see a 36 percent limit on interest rates and consumer protections in place. They add the reason they’re speaking out is a result of some of their congregants struggling to pay back what these loans.