Payday Loans and Cash Advance in Virginia

Restricted: 36% short-term loans only. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Virginia.

Is a Cash Advance Legal in Virginia?

The classic two-week payday loan no longer exists in Virginia. The Virginia Fairness in Lending Act, House Bill 789 of 2020, enacted as Chapter 1215 and effective January 1, 2021, rewrote Chapter 18 of Title 6.2 of the Code of Virginia, replaced every reference to payday loans with short-term loans, raised the maximum loan from $500 to $2,500 and capped the price at 36 percent simple annual interest plus a monthly maintenance fee. A short-term loan must run at least four months and no more than 24, must be repaid in substantially equal installments of principal, interest and fees, and may be the only short-term loan you have at a time. The maintenance fee may not exceed the lesser of 8 percent of the original loan amount or $25 a month, and it cannot be added to the balance that earns interest. You may cancel by 5 p.m. of the third business day after the loan, and a lender may not sue until 60 days after default. The State Corporation Commission Bureau of Financial Institutions licenses every short-term lender, including those that lend online to Virginians. A $300 loan over four months costs about $119 at the maximum, far less than the old $45 two-week fee repeated eight times.

The governing law is Code of Virginia, Title 6.2, Chapter 18, Short-Term Loans (as amended by the Virginia Fairness in Lending Act, 2020 Acts ch. 1215) (Va. Code 6.2-1800 to 6.2-1829; license at 6.2-1801, loan terms at 6.2-1816 and 6.2-1816.1, charges at 6.2-1817).

Loan Limits and Terms in Virginia

Virginia priced the product by combining a rate cap with a flat monthly fee. Interest is simple, on the declining balance, at no more than 36 percent a year. The maintenance fee is fixed at loan origination as 8 percent of the original amount, capped at $25, and is charged each month the loan is open, so it weighs most on small loans: on $300 it is $24 a month, more than the interest. The only other permitted charges are a returned-item fee of up to $25, a late charge of no more than $20, and, after default, court costs and damages that together may not exceed the original loan amount. Loans are precomputed and payable in substantially equal installments, may be prepaid, and can be shortened below four months only when the payment fits the income test.

What a $300 Loan Costs in Virginia

A 14-day loan is illegal, so this uses the four-month minimum (120 days) at the maximum charges in Va. Code 6.2-1817. Interest at 36 percent a year on $300 repaid in four equal monthly installments of about $80.71 is about $22.83. The maintenance fee is the lesser of 8 percent of $300 ($24) or $25, charged four times: $96. Total cost 22.83 + 96 = $118.83, total repaid $418.83. APR = 118.83 / 300 x 365 / 120 = 1.205, about 120.5 percent; the Truth in Lending APR on a declining balance is higher.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Virginia

• No one may make consumer loans above the ordinary legal rate to Virginians, or arrange or broker short-term loans for them, without a State Corporation Commission license, whether or not the lender has a Virginia location (Va. Code 6.2-1801).
• Interest is capped at 36 percent simple annual interest, and the only other regular charge is a monthly maintenance fee of the lesser of 8 percent of the original loan amount or $25 (Va. Code 6.2-1817).
• Every short-term loan must run at least four months and no more than 24, in substantially equal installments, and the total principal you owe any licensee may not exceed $2,500 (Va. Code 6.2-1816, 6.2-1816.1).
• You may cancel a short-term loan at no cost on or before 5 p.m. of the third business day after the loan by returning the principal (Va. Code 6.2-1816.1).
• A licensee may not have you obligated on more than one short-term loan at a time and may not refinance or renew one into another, except through the separate refinancing rules in 6.2-1818.1 (Va. Code 6.2-1816).
• A lender may not start any legal proceeding against you until 60 days after default, and the damages and court costs it may then recover are capped at the original loan amount (Va. Code 6.2-1816, 6.2-1817).
• Late charges are limited to $20 and a returned-payment fee to $25, and the Bureau of Financial Institutions takes complaints against licensees by phone at 804-371-9657 or online (Va. Code 6.2-1817).

Complaints and licence checks go to the Virginia State Corporation Commission, Bureau of Financial Institutions: 804-371-9657, www.scc.virginia.gov/regulated-industries/bureau-of-financial-institutions, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in Virginia

Virginia wrote its licensing rule to reach the Internet directly. Va. Code 6.2-1801 requires a Commission license from any person that makes covered loans to Virginia residents whether or not the person has a location in the Commonwealth, and separately bars anyone from arranging or brokering short-term loans for a Virginia consumer without a license, which shuts down the lead-generator model that once routed Virginians to out-of-state lenders. An online lender that holds a Virginia short-term loan license must offer the same four-to-24-month product at the same 36 percent plus maintenance fee as a storefront; one that does not hold a license is making an unlawful loan. The 2020 Act was aimed squarely at the online lenders and tribal-affiliated operations that had been charging Virginians triple-digit rates while claiming the old payday law did not apply to them. The Bureau of Financial Institutions publishes its licensee list, takes complaints online and by phone, and can refer unlicensed lenders to the Attorney General, though it does not act as the borrower's lawyer or decide individual disputes.

Alternatives If a Payday Loan Is Not the Right Fit

The short-term loan itself is now the state-designed alternative to a payday loan: 36 percent plus a maintenance fee, four months minimum, no balloon and no rollover. For smaller or cheaper credit, Virginia consumer finance companies licensed under Chapter 15 of Title 6.2 make installment loans over longer terms, and federal credit unions offer Payday Alternative Loans, a small-dollar product with a capped rate and a small application fee for members. Non-loan options include an advance on wages from your employer, an overdraft line at your bank, a payment plan with the utility, landlord or clinic you owe, and local emergency assistance through the Department of Social Services. Because the maintenance fee is the same $24 whether you borrow $300 for four months or 12, the cheapest way to use a short-term loan is to borrow only what you need and repay it early, which the statute allows without penalty. Anyone still paying an old-style payday or Internet loan at triple-digit rates should file a complaint with the Bureau of Financial Institutions.

Compare the installment loan and payday alternative loan options before you decide.

Frequently Asked Questions

Nearby States

• MarylandThe fee cap, a worked example and the regulator to call in Maryland.
• District of ColumbiaThe fee cap, a worked example and the regulator to call in District of Columbia.
• West VirginiaThe fee cap, a worked example and the regulator to call in West Virginia.
• KentuckyThe fee cap, a worked example and the regulator to call in Kentucky.
• TennesseeThe fee cap, a worked example and the regulator to call in Tennessee.
• North CarolinaThe fee cap, a worked example and the regulator to call in North Carolina.