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The Virginia General Assembly is currently considering 20 different bills to implement cumbersome regulations that would restrict or effectively eliminate the use of payday advances for Virginia consumers. These regulations would seriously limit financial choices for Virginians, and FreedomWorks opposes government knows best intervention into peoples finical decisions.
Payday advances are a specialty product and are unsecured and high-risk, and as such may carry higher interests rates than a typical credit card because of the increased risk to the lender.
But for thousands of Virginians these small, short-term loans provide often urgently needed credit that might not be available from other sources. Most people, when faced with this predicament, opt to use a credit card or borrow money from a family member. But not everyone has these options, and for those who don't, payday advances often make the critical difference in making ends meet.
FreedomWorks is launching a campaign to stop the various attempts to inject unnecessary government regulation into this market. Over the next few months FreedomWorks activists in Virginia will hit targeted lawmakers with phone calls, emails, and in person lobbying visits to oppose new nanny-state regulations for the payday advance industry.
FreedomWorks President Matt Kibbe commented:
“The Virginia Assembly is considering a 36 percent APR cap for pay day advances. That would put the two-week fee on a $100 loan at just $1.38, hardly enough to stay in business. Even tax-exempt, non-profit charity lenders like Goodwill charge a $10 fee on every $100 borrowed – for a total of 252% APR. If non-profits charge that much, it's clear that no business would be able to survive.
While the champions of nanny state regulations will cheer when pay day advance business close up across Virginia, what is going to happen to the people that depend on these services? Where will they go, to the black-market and neighborhood predators?
High interest rates may not always be the most appealing choice, but for those in a financial bind, they can be the difference that buys groceries and puts gas in the tank.
Regulating a form of credit out of existence will not help consumers in a tight spot.”