Virginians Against Payday Loans (VAPL)

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The Issues

The practices of payday lenders are predatory and usurious.  Below are some arguements used by payday lenders to justify their actions, often their arguments are manipulations of the truth in their favor.  Virginians Against Payday Loans (VAPL) is working to ensure that lending practices in Virginia remain moral and socially just for all people. 

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The Two-Week Loan is a Lie

      Payday lenders distort the facts about their products, claiming they are short-term loans for emergency use. 

Recently, the payday industry trade association announced a $10 million public relations campaign.  The new ads tell borrowers that payday loans are one-time loans for unplanned, short-term expenses.  The trade association website states: “Did you know that payday loans are two-week loans — not annual loans!  The typical fee charged by payday lenders is $15 per $100 borrowed, or a simple 15 percent for a two-week duration.”

      In reality 99% of payday loans are converted into long-term debt. 

Only one percent of payday loans go to borrowers with only one transaction per year.  On average,  90% of payday loans go to borrowers with five or more per year. 62% of loans go to borrowers with 12 or more per year. (Financial Quicksand: Payday Lending Sinks Borrowers in Debt with $4.2 Billion in Predatory Fees Every Year, Center for Responsible Lending, Nov. 30, 2006)

      Payday lenders charge interest rates upwards of 400%.

Payday lenders tell their customers their fees are $15 per hundred borrowed, or thereabouts.  Because these loans average two weeks, the annual interest is near 400%.  And because these loans are repeatedly renewed, rolled over, or closed out and immediately reopened, payday loans are long-term debt – annual interest rates are an accurate measure of their cost and, even for the rare short-term borrower, an accurate means of comparing the cost of credit.

      States that cap annual interest in the 36-percent range eliminate payday loan flipping.

States like North Carolina (36% cap) and Pennsylvania (26% cap) cap annual interest rates for consumer loans in the double digits. Since the practice of payday loan companies partnering with out-of-state banks to operate in states where payday lending is illegal has been stamped out, these states have rid themselves of predatory payday lending.

Virginians Against Payday Loans  810 Forty Eighth Street  Newport News, VA  23607

Contact your legislators and urge them to cap/repeal payday lending in the State of Virginia!

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