The following issues are by no means a definitive list, but many aspects of the following products have predatory features. Click on each to find out the main aspects of each product and the issues surrounding it.

Payday loans/Internet Payday loans

Small dollar, short term loans – repaid to the lender according to the borrower’s pay cycle.

Quick Summary of 2008 legislative changes and main provisions:

  • One Loan at a Time
  • The loan term is two times the borrower’s pay period.
  • Loan Cost – Still high
    • 36% APR + 20% interest fee + $5
    • So If you borrowed $300, you would pay back $300 borrowed plus $74 in interest and other fees if you are paid every two weeks.
  • Extended payment plans once per year; Extended Term Loans on 5th  consecutive loan
  • 24 hour waiting period between loans
  • A database set up to help enforcement
  • Harassment of borrowers is not allowed
  • Internet loans are illegal and unenforceable! Learn more about internet payday loans.

Open-end Line of Credit Loans

Small dollar loans set up as a “Line of Credit” similar to a credit card, but all the credit is given out upfront. There is no set ending date for the loan.

  • A loophole in the Virginia Code used by former payday lenders to continue to operate without restrictions
  • Lines of credit offered up to $750 (generally, but online can be more)
  • Interest rates range between 250% and 360% APR
  • Completely unregulated by state law
  • Collection abuse is widespread
  • Many require electronic access to the borrower’s bank account
  • Negatively reporting to credit bureaus/garnishments
  • Cashnet announced in October they are now offering these loans to Virginia Residents over the internet.

Car title loans

Short-term loan where the security for the loan is the title to a vehicle owned out-right by the borrower. Also called a Motor Vehicle Equity Line of Credit.

Interest caps as follows:

  •  a. 22% per month (264% APR) for that portion of the loan under $700
  •  b. 18% per month (216% APR) for that portion of the loan between $700 and $1400
  •  c. 15% per month (180% APR) for that portion of the loan over $1400
  • Loan must be closed-end, meaning it must have and end date. Minimum loan term of 120 days (4 months) and a maximum loan term of one year.
  • If the borrower doesn’t pay the loan (defaults on the loan, even by one day*), VEHICLES CAN BE REPOSSESSED! It is the only remedy for the lender when the loan isn’t paid. Lenders can’t file suit for a judgment.
  • Repayment must be in substantially equal monthly installments of principal and interest. Some companies interpret this differently. Read the contracts closely.
  • The car used as collateral must be paid off (lien-free)
  • Loan can only be 50% of the wholesale value of the vehicle

*The law provides for notice before repossession, but some car title lenders are choosing to ignore this part of the law.


Fee-based Overdraft protection*

A written agreement that offers the account holder protection against costly extra fees accessed when withdrawals exceed the available balance

  • Overdrafts
  • Insufficient funds
  • NSF (non-sufficient fund) fee
  • As bad as a Payday Loan
  • Banks are now offering Payday Advance Loans
  • Wells Fargo
  • Only Helpful When tied to a savings or line of credit  account, without transaction fees!

Refund anticipation loans


High-fee/cost Prepaid Debit Cards