Charles Guthridge, a lobbyist for open-end credit lenders, doesn’t believe there’s a need to change the law

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Charles Guthridge, a lobbyist for open-end credit lenders, doesn’t believe there’s a need to change the law

“When I was running for office and knocking on doors, and when I ran for re-election, I kept hearing about these,” Yancey said. “My constituents are being hurt.”

Except for a requirement that borrowers have a 25-day grace period to repay the balance with no interest charges, there is no law regulating repayment of open-end credit loans.

Last year, Advance ‘Til Payday paid a $10,000 fine and agreed to refund an average of $130 to 306 Virginians for not granting the grace period. Six similar settlements have been negotiated by the attorney general’s office in the past five years. Consumer advocates grumble that the settlements go easy on the lenders and leave some borrowers out.

“I just want to be sure we are being fair to consumers and being fair to other lenders,” Yancey said.

No caps: Bank loans, unsecured consumer finance loans of more than $2,500, open-end credit plans

He is up against some heavy hitters. Over the past decade, firms in the business have given more than $1.4 million to Virginia politicians.

His two earlier efforts died in committee, with legislators simply sitting on their hands, not voting either up or down.

What Yancey wants is to repeal an obscure, 3-decade-old tweak to state law originally meant to allow stores to offer charge cards – the original open-end credit plans.

Giants like Household Financial, Associates and Beneficial wanted to offer credit cards, as banks are allowed to do under a different section of state law. But those firms pulled out of the business long ago, preferring to stick to making small loans for fixed amounts subject to a 36 percent interest rate cap.

He said there have been few complaints from borrowers. Lenders regularly work out repayment plans when borrowers get in over their heads, he said.

“This is for when the water pump in your car goes, or the baby needs diapers and you’re short,” he said. The idea is a flexible, short-term loan that’s easy to arrange.

The sums involved are small and many of the borrowers simply don’t have other options, payday loans in Pennsylvania especially since open-end credit lenders tend not to ask for credit reports, he said.

Charles Guthridge, a lobbyist for open-end credit lenders, doesn’t believe there’s a need to change the law

While many borrowers do repay the sum within the 25-day grace period – basically repaying the amount borrowed plus the first monthly fee – a large percentage do not. The lenders say 30 to 40 percent of borrowers never pay any interest or principal, and they need to charge fees and high interest rates to cover those losses.

“They were relentless,” her grandson recalls. “We were told we could go to jail. … (They) cursed us out, told us we are deadbeats. .

•One Newport News man owed $1,055 after borrowing $600 on an Allied Cash credit line, even after he paid $872 on the debt.

•Five months after borrowing $250, another Newport News man had paid back $315, but still owed $704, the lender claimed in a court filing. None of the money the man paid went toward his principal – it all went to monthly fees and interest.

36 percent plus 20 percent plus $5: The maximum interest rate, loan fee, and processing fee allowed for a payday loan.

120 percent: The maximum annual rate on pawnbroker loans for less than $25 (84% maximum for loans of more than $25).

264 percent: The maximum annual rate for car title loans of less than $700 (216 percent maximum for the next $700; 150 percent on sums above that).

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