Wednesday, January 13, 2010
Panel can't reach deal to limit car title lenders
The goal was to rein in the high interest that lenders dole out.
General Assembly 2011
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RICHMOND -- Legislators who worked for months to come up with a compromise over how to regulate Virginia's car title lenders failed to reach a deal Tuesday.
That means any legislation to rein in the high-interest lenders must be worked out during a frenzied 60-day session.
Three wildly different bills were offered by Senate Democrats on the seven-member committee, made up of four Senate members and three House members. At least three other bills have been filed.
Sen. Donald McEachin, D-Richmond, said he was disheartened that the committee didn't accomplish anything.
Car title lenders are unregulated in Virginia. There is no law that specifically addresses their business, so they operate under the state's open-end credit law, which allows them to charge unlimited interest after a 25-day grace period.
There is no limit on the amount of a loan, and most car title lenders charge about 300 percent annual interest. If the borrower can't repay the loan, the lender repossesses the vehicle.
McEachin's bill would limit the loans to $2,500, which must be repaid over one year with interest not to exceed 10 percent a month for the first two months then 3 percent a month after that.
Senate Majority Leader Richard Saslaw's bill also calls for the loans to be repaid over a year, but there would be a tiered fee structure.
Sen. Phillip Puckett, D-Russell County, proposed a one-month loan that could be renewed if the borrower paid the interest plus 7 percent of the principal.
