Jason S. Miyares
Attorney General of Virginia

Payday Lenders

Payday loans can offer quick and easy access to money for consumers who may be having temporary cash flow problems or are facing a financial emergency and need to borrow funds for a short length of time. Although these loans are convenient to obtain, consumers are strongly advised to carefully review the contract before they sign it to ensure that they fully understand their obligations as well as the fees charged for these short-term loans. Once a loan agreement is signed, the borrower becomes legally responsible to fulfil the obligations stated in the contract. It is also important that consumers are aware of the significant additional costs they can incur if they are unable to repay these loans when they are due.

Payday Loan Example

The typical payday loan works as follows:

A lender signs a contract with a borrower, agreeing to take the borrower's personal check as collateral for a cash advance.

The lender agrees to not deposit the check for a specified period of time, yet pays cash immediately to the borrower.

Let's say you wanted to borrow $200 until you get your next paycheck in two weeks.

You write a check to a payday lender for $230 (15% of $200 = $30 lender's fee + $200 loan amount = $230) and you get $200 cash in return. The $30 interest you pay on the loan calculates to an Annual Percentage Rate (APR) of 391%.


More Information

The Bureau of Financial Institutions is a regulatory division of the Virginia State Corporation Commission (SCC.) This division administers state laws regarding banking and savings institutions, as well as mortgage brokers and lenders, including payday lenders and others.


Legislation has been enacted allowing payday lenders to transact business in Virginia. The legislation became effective on July 1, 2002 and allowed payday lenders licensed by the State Corporation Commission (SCC) to begin such business on that date.


Read more about Payday Lending 

View the Virginia SCC's Consumer Guide to Payday Lending

Where do I go to file a complaint?

State Corporation Commission (SCC) Bureau of Financial Institutions