Virginia is a Hotbed for Alternative Credit LoansIn the wake of the economic recession there has been a proliferation of alternative credit options, supplying the demand made by low-income consumers affected by the credit crunch, job cuts, and tighter banking standards. From
payday loans to auto title loans, and more – Americans across the country are turning to a variety of short-term credit options when in need of quick cash.
In fact, a study performed in the state of Virginia has shown that 1 in 10
Virginia families has used some sort of payday advance loan to help pay for unforeseen expenses. Nearly 275,000 of these families struggle financially and turn to short-term credit loans to pay for basic needs.
Though 28% of Virginia families live without any savings or assets they could liquidate in case of emergency, the study shows that around 90% of Virginia borrowers do have a traditional bank account.
Payday loan regulations have managed to curtail the industry in the state from $1.3 billion lent in 2008, down to around $200 million in 2010, according to the
State Corporation Commission. Laws regulating car title loans went into effect in October of 2010.
Virginia is one of 22 U.S. states that allow payday loans, car title loans, and other forms of short-term credit. 13 states have outlawed payday lending, while 17 have restricted maximum APR limits to 36%. 26 states have banned auto title loans.
The study proved that Virginians make use of the full spectrum of financial products available to them and has provided data that will help legislators find better ways to meet the needs of their constituents.