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.
SB 432 would amend Virginia’s usury and lending statutes, specifically §§ 6.2-300 and 6.2-303, to restate and clarify the Commonwealth’s general legal interest-rate cap and the categories of loans and transactions that are exempt from that cap. The bill keeps the default rule that, unless another law allows otherwise, contracts may not charge more than 12 percent annual interest, while listing the existing statutory exceptions for certain consumer finance, short-term, title, housing, insurance, premium finance, pawnbroker, and tax-payment arrangements.
The bill also reinforces anti-evasion language by making clear that the 12 percent cap applies to transactions structured to disguise a loan, including sale-leaseback arrangements, sham service charges, and loans arranged through third parties or electronic means. It further specifies that certain inheritance-fund assignment contracts entered into on or after July 1, 2024, are to be treated as loans, with amounts paid above the cash advance treated as interest and subject to the usury cap. Contracts violating the section would remain void, with no right to collect or retain principal, interest, fees, or other charges.
If enacted, SB 432 would affect Virginia’s lending and consumer-credit framework by clarifying the scope of the state’s usury law and reinforcing enforcement against high-cost lending structures that attempt to evade the legal rate limit. It would not create a new general interest-rate ceiling, but it would strengthen the statutory definition of loans and the treatment of certain inheritance-advance transactions, potentially subjecting more arrangements to the 12 percent cap and voiding contracts that exceed it.
The available voting history suggests the bill was not controversial in committee at the point of disposition: it was stricken at the request of the patron on a unanimous 14-0 vote in the Commerce and Labor Committee. Because there are no transcript excerpts, there is no recorded floor or committee debate to indicate broader support or opposition beyond the procedural removal of the bill.
The main substantive issue implicated by the bill is the treatment of alternative financing products, especially inheritance-fund assignment or probate-related cash-advance contracts, which the bill would classify as loans subject to usury limits. More broadly, the bill’s anti-evasion provisions could affect lenders, finance companies, and entities using structured transactions or online channels to offer credit above the legal rate. However, no specific objections or supporters are identified in the provided record, and the bill was ultimately withdrawn by the patron rather than defeated on a recorded policy vote.