Support is continuing to mount for further reforms and regulations on the payday loan industry, restrictions that could suffocate the business model.
Three years after the Virginia General Assembly passed a series of mandates on short-term, high-interest loans, councilors across the state are pushing for new bills and further regulation.
Leading the fight in Virginia is Staunton City councilman Bruce Elder, according to the News Virginian. Currently on the table are regulations that would cap annual interest rates on payday and auto title loans at 36 percent, much like Montana has done.
In previous years, reform efforts failed in Virginia when negotiations broke off between industry representatives, consumer advocates and the state, says the news source.
Industry representatives say that such a cap on interest rates would drive payday lenders and
nontraditional credit suppliers out of business.
"They might as well call it the 'Eliminate Payday Loans Act,'" Jamie Fulmer, spokesman for Advance American, told the News Virginian.
According to the website Rebuild, the leading consumer lobby group, the Center for Responsible Lending admitted that a 36 percent rate cap would kill the payday loan industry. The site explains that high interest rates are necessary because payday lenders only have a short period of time to recoup costs for their loans, while banks and other financial institutions have years.