Lawmakers in Virginia appear poised to “fix” an elusive “predatory lending problem. ” Their focus may be the small-dollar loan market that presumably teems with “outrageous” interest levels. Bills before the installation would impose a 36 % rate of interest limit and alter the market-determined nature of small-dollar loans.
Other state legislators in the united states have passed away comparable limitations. 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, restriction gains from trade, and impose expenses on consumers.