Pew Applauds Virginia for Protecting Borrowers, Reforming Small-Dollar Loan Laws

Gov. Northam signs landmark, balanced measure expected to save Virginians $100 million annually

Virginia Passes Comprehensive Payday and Title Lending Reform

WASHINGTON—The Pew Charitable Trusts today commended Virginia Governor Ralph Northam (D) for signing into law sensible reforms to the commonwealth’s small-dollar loan marketplace. On Feb. 21, the House of Delegates voted on a bipartisan basis, 61-36, to adopt Virginia state Senator Mamie Locke’s (D-Hampton) S.B. 421—a companion bill to Delegate Lamont Bagby’s (D-Henrico) H.B. 789—sending it to the governor’s desk for signature. The comprehensive new law makes the commonwealth a leader on safe, small credit, and is projected to save Virginia families more than $100 million annually. Because of the coronavirus pandemic, Gov. Northam has moved up the law’s enactment date by six months, to Jan. 1, 2021, which would save consumers an additional $50 million.

Prior to the bill’s passage, research showed that Virginia had some of the weakest laws in the country for payday and vehicle title loans—allowing lenders to charge Virginians three times more than they charge borrowers in other states, with APRs regularly exceeding 200 percent. Statewide, 1 in 8 title loan borrowers had their vehicles repossessed when they fell behind on payments.

The new law takes a balanced approach to maintaining a viable market for lenders while expanding access to affordable credit for borrowers. It achieves the three key markers of safe small-dollar lending: lower prices, affordable payments, and a reasonable time to repay loans.

Alex Horowitz, senior research officer for Pew’s consumer finance project, issued the following statement:

“We appreciate the Virginia General Assembly’s dedicated work in crafting this sensible reform bill to protect borrowers and give struggling Virginia families much-needed financial relief. The new law will save each borrower hundreds of dollars annually.

“The legislature has taken groundbreaking steps to modernize its consumer finance statutes—which now enable a lower-cost and more competitive small-loan market—while closing gaps in the law that allowed unlicensed lenders to harm the commonwealth’s residents.

“This comprehensive, evidence-based law balances the interests of borrowers and lenders by expanding access to affordable credit while establishing strong consumer protections to prevent the cycle of debt that has harmed hundreds of thousands of Virginia borrowers.

“Low- and moderate-income Virginians will save an estimated $1 billion in interest and fees over the next decade, putting money back into borrowers’ pockets and boosting local economies.

“Based on evidence from other states, the governor has proposed an earlier start date that allows the market ample time to transition—so that consumers are protected and affordable credit flows into Virginia more quickly. This decision will save borrowers hundreds of dollars when they need it most.

 “With Gov. Northam’s signature, the commonwealth will be one of the best places in the country to responsibly borrow and lend small amounts.” 

More information on small-dollar loans is available at

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