# Payday lenders leave Virginia **URL:** \ **Category:** Great Debates\ **Created:** [April 29, 2009, 7:50pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761 "2009-04-29T19:50:15Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [April 29, 2009, 7:50pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/1 "2009-04-29T19:50:15Z")
The Commonwealth of Virginia has adopted strict limits on “payday loans.” These are, for the uninitiated, very short term, high-interest/fee loans intended to be repaid by the loan recipient’s next payday. As a result of these new restrictions, five payday lenders are closing their Virginia operations. I think the payday loan is a terrible financial product, and you’d have to have holes in your head to use one. But I wonder if the clients of those organizations think that Virginia lawmakers did them a favor, now that they can’t get those loans anymore. ---
**Author:** ![DSYoungEsq](https://avatars.discourse-cdn.com/v4/letter/d/c6cbf5/32.png) [@DSYoungEsq](https://boards.straightdope.com/u/DSYoungEsq)\ **Post date:** [April 29, 2009, 7:58pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/2 "2009-04-29T19:58:30Z")
Well, it probably will impact some people who had fallen into the habit of relying upon those loans. However, in the long run, it will do them good to stop relying upon them, since they will free up for use the ridiculous interest/fees they had to pay on the loans. So I am thinking in the long run, they will be perfectly happy. 🙂 ---
**Author:** ![Bearflag70](https://avatars.discourse-cdn.com/v4/letter/b/8e7dd6/32.png) [@Bearflag70](https://boards.straightdope.com/u/Bearflag70)\ **Post date:** [April 29, 2009, 8:09pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/3 "2009-04-29T20:09:01Z")
> [@Bricker](#): > > I think the payday loan is a terrible financial product, and you’d have to have holes in your head to use one. But what if you run out of smokes before payday? Then what, smart guy? 😉 ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [April 29, 2009, 8:26pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/4 "2009-04-29T20:26:45Z")
I’m sure neighborhood loan sharks will pick up the slack. ---
**Author:** ![Cisco](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Cisco](https://boards.straightdope.com/u/Cisco)\ **Post date:** [April 29, 2009, 8:29pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/5 "2009-04-29T20:29:08Z")
> [@Bricker](#): > > But I wonder if the clients of those organizations think that Virginia lawmakers did them a favor, now that they can’t get those loans anymore. Do those places have a lot of repeat customers? ---
**Author:** ![Skald\_the\_Rhymer](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Skald\_the\_Rhymer](https://boards.straightdope.com/u/Skald_the_Rhymer)\ **Post date:** [April 29, 2009, 8:31pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/6 "2009-04-29T20:31:33Z")
> [@Bricker](#): > > But I wonder if the clients of those organizations think that Virginia lawmakers did them a favor, now that they can’t get those loans anymore. Here’s my cynical answer: the clients won’t, because they are stupid. I know a guy who lost his (admittedly cheap) house because of payday loans. He got behind on his house note one month and so took out a loan to compensate, then kept rolling it over because he enjoyed the little "extra’ bit of money he perceived himself as having, until he got to the point where he could no longer service his debt. And this was in '02–long ere the current crisis. He did it to himself, and though I felt pity for his wife and kids, I had little for him. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [April 29, 2009, 8:39pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/7 "2009-04-29T20:39:32Z")
> [@Cisco](#): > > Do those places have a lot of repeat customers? No cite handy, but I recall reading that most of their business is with regular or semi-regular customers. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [April 29, 2009, 8:42pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/8 "2009-04-29T20:42:38Z")
> [@Cisco](#): > > Do those places have a lot of repeat customers? Yes. > [@](#): > > Yet according to industry sources, the typical customer takes out 11 or 12 payday loans a year, and nearly 40% of borrowers extend their loans past the initial two-week term. One payday loan firm reported that it counts on repeat customers for more than 89% of its business. [http://www.alarise.org/paydayweb.pdf](http://www.alarise.org/paydayweb.pdf) [http://minnesota.publicradio.org/display/web/2009/03/13/payday\_loans/](http://minnesota.publicradio.org/display/web/2009/03/13/payday_loans/) ---
**Author:** ![Lamar\_Mundane](https://avatars.discourse-cdn.com/v4/letter/l/85f322/32.png) [@Lamar\_Mundane](https://boards.straightdope.com/u/Lamar_Mundane)\ **Post date:** [April 29, 2009, 8:42pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/9 "2009-04-29T20:42:44Z")
Good for Virginia. I see this as similar to the banning of indoor smoking across the country - Yes, it is a huge inconvenience to a lot of people, and it certainly pissed a lot of people off, but it was done for the right reasons, and in the long run it makes things better for the vast majority of us. Good governing isn’t just giving the people what they want. ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [April 29, 2009, 8:48pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/10 "2009-04-29T20:48:01Z")
> [@Bricker](#): > > The Commonwealth of Virginia has adopted strict limits on “payday loans.” These are, for the uninitiated, very short term, high-interest/fee loans intended to be repaid by the loan recipient’s next payday. As a result of these new restrictions, five payday lenders are closing their Virginia operations. > > I think the payday loan is a terrible financial product, and you’d have to have holes in your head to use one. > > But I wonder if the clients of those organizations think that Virginia lawmakers did them a favor, now that they can’t get those loans anymore. Nothing you’ve posted necessarily means people can’t get these loans any more. 5 lenders have quit – out of how many? How many still in the business will expand into areas no longer served by the 5? There may be some other laws to prevent this, but it may be that some “legitimate” banks might offer some new services to fill that need. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [April 29, 2009, 8:50pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/11 "2009-04-29T20:50:07Z")
> [@MOIDALIZE](#): > > I’m sure neighborhood loan sharks will pick up the slack. Ehhh, it’s about the same interest rate. I wish that was a joke. ---
**Author:** ![Lamar\_Mundane](https://avatars.discourse-cdn.com/v4/letter/l/85f322/32.png) [@Lamar\_Mundane](https://boards.straightdope.com/u/Lamar_Mundane)\ **Post date:** [April 29, 2009, 8:56pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/12 "2009-04-29T20:56:30Z")
> [@Boyo\_Jim](#): > > Nothing you’ve posted necessarily means people can’t get these loans any more. 5 lenders have quit – out of how many? How many still in the business will expand into areas no longer served by the 5? > > There may be some other laws to prevent this, but it may be that some “legitimate” banks might offer some new services to fill that need. I’ve seen some neighborhoods where there are five on one block. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [April 29, 2009, 8:57pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/13 "2009-04-29T20:57:43Z")
Yeah, but the payday lenders won’t break your thumbs or take your car if you don’t pay them. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [April 29, 2009, 9:00pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/14 "2009-04-29T21:00:41Z")
> [@Boyo\_Jim](#): > > There may be some other laws to prevent this, but it may be that some “legitimate” banks might offer some new services to fill that need. The timing is probably pretty poor for that because “Higher default rates for payday loan portfolios indicate that loan loss reserves and capital levels that may be adequate for some other forms of subprime lending may not properly cover the greater risks associated with payday loans.” [FYI: An Update on Emerging Issues in Banking | FDIC.gov](http://www.fdic.gov/bank/analytical/fyi/2003/012903fyi.html) But see, [http://www.responsiblelending.org/issues/payday/briefs/page.jsp?itemID=29557872](http://www.responsiblelending.org/issues/payday/briefs/page.jsp?itemID=29557872) (default rate is comparable to car loans and personal loans, but APR is much higher) ---
**Author:** ![tumbleddown](https://avatars.discourse-cdn.com/v4/letter/t/e9bcb4/32.png) [@tumbleddown](https://boards.straightdope.com/u/tumbleddown)\ **Post date:** [April 29, 2009, 9:03pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/15 "2009-04-29T21:03:01Z")
I wonder how much this has to do with the number of military families stationed in Virginia and the growing use of payday lenders by military families that cannot make ends meet otherwise. This could either be brilliant political maneuvering, or disastrous for a lot of folks. ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [April 29, 2009, 9:13pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/16 "2009-04-29T21:13:21Z")
> [@Gfactor](#): > > The timing is probably pretty poor for that because “Higher default rates for payday loan portfolios indicate that loan loss reserves and capital levels that may be adequate for some other forms of subprime lending may not properly cover the greater risks associated with payday loans.” [FYI: An Update on Emerging Issues in Banking | FDIC.gov](http://www.fdic.gov/bank/analytical/fyi/2003/012903fyi.html) > > But see, [http://www.responsiblelending.org/issues/payday/briefs/page.jsp?itemID=29557872](http://www.responsiblelending.org/issues/payday/briefs/page.jsp?itemID=29557872) (default rate is comparable to car loans and personal loans, but APR is much higher) It might also be that lowering APR from – what I’ve heard is something like 400 or 500 percent in some cases – insane to merely predatory might improve the default rate. But I have no expertise in banking to back up such an idea. ---
**Author:** ![LawMonkey](https://avatars.discourse-cdn.com/v4/letter/l/d6d6ee/32.png) [@LawMonkey](https://boards.straightdope.com/u/LawMonkey)\ **Post date:** [April 29, 2009, 9:18pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/17 "2009-04-29T21:18:36Z")
We passed a law regulating these guys in Ohio. I heard an (NPR?) story recently that explained that they’d just restructured their interest charges into “fees” and were taking something like the same interest rate. Anecdotally, I noticed exactly zero payday lenders going out of business after November. I’m curious if the Virginia law is more tightly drafted… ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [April 29, 2009, 9:30pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/18 "2009-04-29T21:30:55Z")
> [@tumbleddown](#): > > I wonder how much this has to do with the number of military families stationed in Virginia and the growing use of payday lenders by military families that cannot make ends meet otherwise. This could either be brilliant political maneuvering, or disastrous for a lot of folks. They passed a federal law a year or so back limiting the interest pay-day lenders could charge to military personnel. ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [April 29, 2009, 9:33pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/19 "2009-04-29T21:33:41Z")
> [@MOIDALIZE](#): > > Yeah, but the payday lenders won’t break your thumbs or take your car if you don’t pay them. Oddly enough, the businesses that are staying are taking advantage of what is either an inadvertant loophole left by the new law, or a devilishly clever way to still screw consumers. They are doing “car title loans,” where the loan is secured by a car title. So to answer **Boyo Jim** ’s question, the majority of these lenders are shutting their doors, but some will remain. And to answer **MODALIZE** ’s speculation: actually, yes: they DO take your car. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [April 29, 2009, 9:42pm UTC](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761/20 "2009-04-29T21:42:04Z")
If you agree to put your car up as collateral for a loan, then you really can’t be surprised when it gets repo’d. I was talking about the neighborhood goon deciding on his own that you’re going to lose your car (or jewelry, or whatever) until you pay him back. [Next page](https://boards.straightdope.com/t/payday-lenders-leave-virginia/494761.md?page=2)