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Virginia State Assembly passes payday lending bill
RICHMOND, Va. (3/11/08)--Virginia's state legislature passed a compromise package of payday lending reforms Thursday that place broad restrictions on short-term, high-interest lenders. The bill limits how many loans a borrower can get each year and extends the amount of time a borrower has to repay the loan. It would establish a database to track payday loans. Borrowers would be limited to one loan at a time and would have two pay cycles to repay it (Associated Press via Thomson Financial March 7). Borrowers taking out five loans during a six-month period would either be prohibited from receiving another loan for 60 days or be required to enter a 60-day extended payment plan. They would then be barred from taking out another loan for an additional 90 days. Borrowers can request the extended payment plan and its 150-day lockout at any time, but only once each year. The measures allow lenders to charge 20% of a loan, plus 36% interest and a $5 fee to cover the cost of the tracking database. The bill passed the House, 91-9, and the Senate 37-2, with one abstention. Gov. Timothy M. Kaine indicated he would sign the legislation. He has 30 days in which to do so. If he signs, the bill would become law effective Jan. 1, 2009.
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