A BILL to amend and reenact §§ 6.2-300 and 6.2-303 of the Code of Virginia, relating to financial institutions; loans and legal rate of interest.
HB827 revises Virginia’s usury and lending statutes by amending definitions in § 6.2-300 and tightening the rules in § 6.2-303 governing the legal rate of interest. The bill keeps the general rule that loans may not charge more than 12 percent annual interest unless another statute specifically allows a higher rate, and it restates the list of existing exceptions for certain lenders and products such as consumer finance companies, short-term loans, motor vehicle title lenders, premium finance companies, pawnbrokers, and tax payment agreements.
The bill also expands and clarifies anti-evasion language. It makes clear that the 12 percent cap applies to transactions structured to avoid usury limits, including disguised sales, leasebacks, collateral arrangements, third-party loan procurement, and online or electronic lending activity directed into Virginia even without a physical location in the Commonwealth. It further states that contracts violating the section are void and that no principal, interest, fees, or other charges may be collected or retained under such contracts. In addition, it expressly treats certain inheritance-funding cash advance contracts as loans subject to the usury cap, and it preserves the ability of banks and savings institutions to advertise, facilitate, or service loans made in compliance with applicable law.
If enacted, HB827 would strengthen and clarify Virginia’s consumer lending and usury framework in Title 6.2 by broadening the statutory definition of prohibited evasive lending practices and by expressly bringing inheritance-based cash advance arrangements within the legal interest-rate rules. It would affect lenders, loan arrangers, online lenders, and entities involved in alternative financing structures, while preserving existing statutory exceptions for specified industries and products. The bill would also reinforce the legal consequence that contracts made in violation of the usury section are void and unenforceable for all amounts.
The available legislative history suggests the bill did not advance beyond committee and was ultimately stricken from the docket in Labor and Commerce by a unanimous 22-0 vote. That outcome indicates little visible opposition on the recorded vote, but also no committee support sufficient to move the bill forward. Because no committee transcript is provided, there is no recorded debate to show broader support or criticism beyond the final procedural disposition.
The main policy tension in HB827 appears to be between consumer protection and the scope of regulation over lending innovations. Supporters would likely view the bill as closing loopholes in Virginia’s usury laws, especially for online lending, disguised financing arrangements, and inheritance cash-advance products. Potential opponents or skeptics may have been concerned that the bill could sweep too broadly, affect legitimate financing structures, or create uncertainty for lenders and service providers operating under existing exceptions. The unanimous committee action to strike the bill suggests either unresolved concerns about the bill’s reach or a lack of consensus that the proposed changes were necessary.