Lawmakers in Virginia appear poised to “fix” an elusive “predatory lending problem. ” Their focus could be the small-dollar loan market that allegedly teems with “outrageous” interest levels. Bills before the installation would impose a 36 per cent rate of interest limit and alter the market-determined nature of small-dollar loans.
Other state legislators in the united states have actually passed away restrictions that are similar. The goal should be to expand access to credit to enhance consumer welfare. Rate of interest caps work against that, choking from the way to obtain small-dollar credit. These caps create shortages, limitation gains from trade, and impose costs on customers.