Fact & Fiction : Virginia Payday Loans
For those on a tight budget, unexpected expenses such as home or car repairs can be a financial disaster. You may find yourself in a situation where you do not have the money available to meet a pressing need and where you have some time until your next paycheck comes in and provides you with the cash you need. In this situation, many people who are coping with financial issues will turn to payday lenders.
Payday lenders provide quick loans that last for a week or two. The idea is that you will take on this short - term loan to meet an immediate expense and you will then repay the loan when your paycheck comes in. These types of loans are very easy to qualify for because they are short - term loans and because they cater to those who have either no credit or who have bad credit and who cannot qualify for a more traditional loan.
Payday loans are a viable solution for many due to speed, convenience and easy qualifying requirements. It is possible to get a loan right away as long as you have a bank account and as long as you have a job, even if you have credit troubles in your past.
Unfortunately, there are some very significant downsides associated with payday loans, which means these are not the right solution for everyone. The biggest downside to payday loans is that you will have to pay a very high interest rate for these types of loans. In fact, with the fees and the costs associated with taking on a payday loan, the annual percentage rate (APR) is commonly in excess of 400 percent. When compared with the annual percentage rate of a credit card - usually less than 30 percent - it is very easy to see that these loans can be extremely expensive for those who take them on.
Those who borrow from a payday lender can also find themselves falling into a viscous cycle. When they use their paycheck to pay the loan plus interest, they have less money left over and may find themselves needing to take on another payday loan or extend the one they took before. Fees and high interest are charged each time, making it difficult to escape the cycle.
Because of the risks associated with payday loans as well as the high cost, you should think very carefully before you consider entering into this type of loan arrangement.
Virginia Payday Loan Laws
Virginia has imposed certain laws in order to try to protect consumers from the dangers of payday loans. For example, lawmakers have limited the amount that can be borrowed in a payday loan to just $500. A lender cannot make more than one outstanding loan to a person at a time.
The term of a fast cash Virginia loan must also last for at least twice as long as your pay cycle. For example, if you get paid every week, you must have a loan term that lasts for at least 14 days. If you get paid every two weeks, then your loan term must last for at least one month.
The interest rate charged on your loan is limited as well by Virginia law. The lender can charge you interest at a simple annual rate of 36 percent, a loan fee of up to 20 percent of the cost of the money advanced and a verification fee of up to $5. These fees are still quite high, but they at least protect you to some extent.
Finally, Virginia law mandates that payday lenders comply with licensing requirements and limits lending to those in the military.
Stay Educated About Payday Loans
Virginia laws aim to protect consumers and those living in the state considering taking on payday loans. Those considering a Virginia fast cash loan should also take time to evaluate the terms of the loan in order to ensure that it makes sense for them in their particular situation.