CHAPTER 489

An Act to amend and reenact §§ 6.1-249, 6.1-271, 6.1-272, 6.1-276, 6.1-277,
6.1-280, 6.1-282, 6.1-285, 6.1-286, 6.1-287, 6.1-288, 6.1-291, 6.1-294 and
6.1-801, as severally amended, of the Code of Virginia, relating to the
Small Loan Act.

[(S 59]

Approved April 4, 1968

Be it enacted by the General Assembly of Virginia:

1. That §§ 6.1-249, 6.1-271, 6.1-272, 6.1-276, 6.1-277, 6.1-280, 6.1-282,
6.1-285, 6.1-286, 6.1-287, 6.1-288, 6.1-291, 6.1-294 and 6.1-301, as severally
amended, of the Code of Virginia be amended and reenacted as follows:

§ 6.1-249. Compliance with chapter; license required.—No person
shall engage in the business of lending in amounts of * one thousand
dollars or less, and charge, contract for, or receive, directly or indirectly,
on or in connection with any loan, any interest, charges, compensation,
consideration or expense which in the aggregate are greater than the
rate otherwise permitted by law except as provided in and authorized by
this chapter and without first having obtained a license from the Com-
mission.

§ 6.1-271. Maximum rates of charge set by Commission.—(1) The
Commission shall investigate from time to time the economic conditions
and other factors relating to and affecting the business of making loans
under this chapter, and shall ascertain all pertinent facts necessary to
determine what maximum rates of charge should be permitted. Upon the
basis of such ascertained facts, and subject to the restrictions, provisions
and limitations imposed by this chapter, the Commission shall determine
and fix by regulation or order the maximum rates of charge in connection
with such loans which will induce efficiently managed commercial capital
to be invested in such business in sufficient amounts to make available
adequate credit facilities to individuals seeking such loans, and which will
afford those engaged in such business a fair and reasonable return upon
the assets; provided, however, that the Commission shall not fix any such
rates of charge in excess of two and one half per centum a month on
that part of the unpaid principal balance of any loan not in excess of three
hundred dollars, and one and one half per centum a month on any re-
mainder of such unpaid principal balance. Subject to such limitation as
to maximum rates, the Commission may from time to time, upon the basis
of changed conditions or facts, redetermine and refix any such maximum
rates of charge, but, before determining or redetermining any such maxi-
mum rates, the Commission shall give reasonable notice of its intention
to consider doing so to all licensees and a reasonable opportunity to be
heard and introduce evidence with respect thereto and such notice shall
also be published once each week for two consecutive weeks in some
newspaper published in or having a general circulation in the county,
city or town in which any small loan licensee has an office. Any such
changed maximum rates of charge shall not affect preexisting loan con-
tracts lawfully entered into between any licensee and any borrower.

(2) Optional Method of Computing Charges—In lieu of computing
charges at the monthly rate upon unpaid principal balances from time
to time outstanding, a licensee may, when the loan contract tis repayable
in substantially equal installments of principal and charges combined,
compute charges in terms of dollars per one hundred dollars per year
and proportionately for longer or shorter periods of time, on the original
principal at the time the loan is made for the full term of the loan con-
tract from the date of making to the date of maturity without regard
to any requirement for installment payments, and such charges so com-
puted shall be added to the principal of the loan. Whenever the Com-
mission shall redetermine and refix the maximum monthly rate of
charge, it shall also redetermine and refix the rate of charge in terms of
dollars per one hundred dollars per year which shall be the approximate
equivalent when calculated to maturity, rounded off to the nearest
whole dollar, of the maximum monthly rates of charge redetermined and
refixed pursuant to subsection (1) above based on a loan repayable in
twelve substantially equal consecutive monthly installments of prin-
cipal and charges combined; provided, however, that the Commission shall
not fix any such rates of charge stated in terms of dollars per one hundred
dollars per year in excess of seventeen dollars per one hundred dollars
per year on that part of the original principal balance of any loan not
in excess of three hundred dollars; and twelve dollars per one hundred
dollars per year on that part of the original principal balance exceeding
three hundred dollars but not exceeding one thousand dollars.

Where the charges contracted for are in terms of dollars per one
hundred dollars per year, the provisions of the following subsections (a)
through (g) shall apply:

(a) The charge shall be computed on the original principal at the
time the loan is made for the full term of the contract from the date
of making to the scheduled due date of the final installment without
regard to any requirement for installment payments. When so computed,
the charges shall be added to the principal of the loan and the face
amount of any note or contract may, notwithstanding any other provision,
exceed one thousand dollars by the amount of charges so added to the
original principal amount, but if such loan contract is prepaid in full
prior to maturity by cash, a new loan or otherwise, the portion of the
charges originally added to the principal of the loan attributable to the
installments following the date of prepayment in full shall be rebated.

(b) All payments made on account, except those applied to default
or deferment charges, shall be deemed to be applied to the unpaid install-
ments in the order in which they are due and the acceptance or payment
of charges where such charges are added to principal as authorized herein
shall not be deemed to constitute payment, deduction or receipt thereof
in advance nor compounding under § 6.1-277.

(c) The amount of charges originally added to the principal of the
loan applicable to any particular monthly installment period shall be
that proportion of such charges, excluding any adjustment for a first
installment period of more than one month, which the balance of the
contract scheduled to be outstanding during such monthly period bears to
the sum of all the monthly balances originally scheduled to be outstanding.

(d) Notwithstanding the requirement for substantially equal con-
secutive monthly installments, a first installment period may exceed one
month by as much as fifteen days and the charges for each day exceeding
one month shall be one-thirtieth of the charges which would be attributable
to a first installment period of one month. The charges for such extra
days in a first installment period may be added to the first installment
and shall be excluded in computing any required rebate.

(e) If, as of an installment due date, the payment dates of all
wholly unpaid installments are deferred for one or more full months
and the maturity of the contract is extended for a corresponding period,
the licensee may charge and collect a deferment charge which shall not
exceed the amount of the charges originally added to principal attribut-
able to the first of the deferred installments multiplied by the number
of months in the deferment period. The deferment period is that period
of time in which no scheduled payment has been made or in which no
payment is required by reason of the deferment. No installment on which
a default charge has been collected or on account of which any partial
payment has been made, shall be deferred or included in the computation
of a deferment charge unless the default charge or partial payment ts
refunded to the borrower or credited to the deferment charge. Any pay-
ment received at the time of deferment may be applied first to the defer-
ment charge and the remainder, if any, applied to the unpaid balance
of the contract; provided, however, that if such payment is sufficient to
pay, in addition to the appropriate deferment charge, any installment
which is in default and the applicable default charge, it shall be first
so applied, and any such installment shall not then be deferred or subject
to the deferment charge. The deferment charge shall be excluded in
computing any required rebate; however, if a rebate of charges originally
added to the principal of the loan is required during a deferment period,
then the borrower shall receive a rebate of the portion of the deferment
charge applicable to any unexpired full months of the deferment period.
The deferment charge may be collected at the time of deferment or at any
time thereafter. After a deferment has been made the installments so
deferred shall fall due in the same order as provided for by the contract
originally and the portion of the charges originally added to the principal
of the loan attributable to any such deferred installment shall be the
same as was attributable to such installment originally. The deferment
agreement may also provide for the payment by the borrower of any
additional cost for continuing in force the deferred maturity insurance
given as security for a loan.

If any installment is not paid in full within seven days, Sun-
days and holidays included, after it is due, the licensee may charge and
collect at that time, or at any time thereafter, a default charge not to
exceed five cents for each one dollar of such installment, but such default
charge may be collected only once on any installment.

(9g) If two or more full installments are in default for one full
month or more at any installment due date, and if the contract so provides,
the licensee may reduce the contract balance by the rebate which would
be required for prepayment in full on such installment due date. The
amount remaining shall be deemed the unpaid principal balance. There-
after the licensee may charge, collect and receive charges at monthly
per centum rates not in excess of those in effect at the time the loan was
made. Said charges shall be computed on the unpaid principal balances
from time to time outstanding, applying all payments first to charges
and the remainder, if any, to principal, until the loan is paid in full.
When a contract has been adjusted as provided in this subsection, the
charges shall not be subject to further rebate requirement nor shall any
further default or deferment charges be made on such contract.

6.1-272. Maximum rates prior to Commission action.—Until such
time as different rates are fixed by the Commission in accordance with the
preceding section (§ 6.1-271), every licensee may contract for and receive
on any loan of money, not exceeding * one thousand dollars in amount,
charges at rates not exceeding two and one half per centum a month
on that part of the unpaid principal balance of any loan not in excess
of three hundred dollars, and one and one half per centum a month on
any remainder of such unpaid principal or, in leu thereof, when the loan
contract is repayable in substantially equal installments of principal and
charges combined, charges at a rate not exceeding seventeen dollars per
one hundred dollars per year on that part of the original principal not
exceeding three hundred dollars; twelve dollars per one hundred dollars
per year on that part of the original principal balance exceeding three
hundred dollars but not exceeding one thousand dollars. Such charges
shall be computed on the original principal of the loan for the full term
of the loan contract from the date of making to the date of scheduled
maturity without regard to any requirement for installment repayments,
and when so computed shall be added to the principal of the loan. When
the charges contracted for are in terms of dollars per one hundred dollars
per year, the provisions of subsection (2) of § 6.1-271 shall be applicable.

§ 6.1-276. Limitation of interest after maturity of loan.—For the
period beginning * siz months after the date of * maturity, as originally
scheduled or as deferred in the event of deferment, of any loan contract
under the provisions of this chapter, no further charges than interest
at six per centum per annum shall be computed or collected from any
party to the loan upon the unpaid * balance of the loan.

§ 6.1-277. Method of computing charges.— When charges on loans *
are calculated under the per-centum-per-month method authorized by
subsection (1) of § 6.1-271, they shall not be paid, deducted, or received
in advance, nor compounded. If part or all of the consideration for a loan
contract is the unpaid principal balance of a prior loan, then the principal
amount payable under the loan contract * shall not include any unpaid
charges on the prior loan except such charges which have accrued within
sixty days before the making of the new loan contract but may include any
unpaid balance remaining after giving any required rebate. The inclusion
of these charges shall not be made oftener than once each six months, the
six months’ period to be computed from the date of entering into the new
loan contract; and the foregoing privilege is intended for the convenience
of the borrower and is not to be construed or applied to validate a general
course of dealings by a licensee with the intent and for the purpose of
profit. Except where the charges are expressed and computed on a dollar-
add-on basis, charges on loans shall (1) be computed and paid only as a per-
centage per month of the unpaid principal balance or portion thereof; (2)
be so expressed in every obligation signed by the borrower, and (3) be com-
puted on the basis of the number of days actually elapsed. For the purpose
of computing charges, whether at the maximum rate or less, a month
Shall be * that period of time from one date in a month to the correspond-
ing date in the following month but if there is no corresponding date
then to the last day of such following month and a day shall be one-
thirtieth of a month where computation is made for a fraction of a month.

§ 6.1-280. Advertising.—No licensee or other person subject to this
chapter shall advertise, display, distribute or broadcast, or cause or per-
mit to be advertised, displayed, distributed or broadcast, in any manner,
whatsoever, any false, misleading or deceptive statement or representation
with regard to the rates, terms or conditions for loans in the amount
or of the value of * one thousand dollars or less. The Commission may
require that charges or rates of charge, if stated by a licensee, be stated
fully and clearly in such manner as it deems necessary to prevent mis-
understanding by prospective borrowers, and it may permit or require
licensees to refer in their advertising to the fact that their business 1s
under State supervision, subject to conditions imposed by it to prevent
false, misleading or deceptive impression as to the scope or degree of
protection provided by this chapter.

§ 6.1-282. Requirements for making and payment of loans.—Every
licensee shall:

(1) At the time any loan is made, deliver to the borrower, or if
there are two or more borrowers to one of them, a * statement which *
shall disclose in clear and distinct terms the amount and date of the
loan, a clear description of the payments required, the type of security,
if any, for the loan, a notice that where the charges have been computed
in terms of dollars per one hundred dollars per year that default and
deferment charges may be added and if such loan is prepaid in full that
a rebate of unearned charges will be made, the names and addresses of
the licensee and of the principal debtor on the loan contract and the agreed
eae or rate of charge, and disclose such other information as required

y aw,

(2) * Give the borrower a plain receipt for all cash payments.
The Commission may specify the form and content of such receipts in
keeping with the intent and purpose of this chapter.

(3) Permit payment to be made in advance * in whole, or in part
equal to one or more full installments, but the licensee may apply the
payment first to * any amounts which are due and unpaid at the time
of such payment;

(4) Upon repayment of the loan in full, mark plainly every obliga-
tion and security other than a security agreement executed by the bor-
rower with the word “Paid” or “Cancelled,” mark satisfied any judgment,
restore any pledge, cancel and return any note and any assignment given
by the borrower to the licensee and release any security agreement or
other form of security instrument which no longer secures an outstanding
loan between the borrower and the licensee;

(5) In the event of collection by foreclosure sale or otherwise, pay
and return to the borrower or to whomsoever is entitled thereto any sur-
plus arising after the payment of the expenses of collection, sale or fore-
closure and satisfaction of the debt.

§ 6.1-285. Installment payments.—No licensee shall enter into any
contract of loan under this chapter providing for installment payments
extending more than twenty-one calendar months from the scheduled date
of making the contract, for loans of six hundred dollars or less in princi-
pal amount, and thirty-one calendar months from the date of making
the contract for loans in excess of six hundred dollars in principal amount,
and every contract shall provide for repayment of the amount loaned
in substantially equal installments, either of principal or of principal
and charges in the aggregate, at approximately equal periodic intervals
of time. But nothing contained in this chapter shall prevent a loan being
considered a new loan because the proceeds of the loan are used to pay
an existing contract.

§ 6.1-286. Limitation on borrower’s or surety’s indebtedness.—No
licensee shall permit any person, as borrower, or as endorser, guarantor
or surety for any borrower, or otherwise, or any husband and wife, jointly
or severally, to become obligated, directly or contingently, or both, (a)
to the licensee at any time in a sum of more than * one thousand dollars
in principal, nor (b) under more than one contract of loan at the same
time for the purpose of obtaining a higher rate of charge than would
otherwise be permitted by this chapter; provided, however, if a licensee
purchases all, or substantially all, the loan contracts of another licensee
and has at the time of the purchase loan contracts with one or more
of the borrowers whose loans are purchased, the purchaser shall be en-
titled to collect the principal and charges according to the terms of each
loan contract, but the purchaser shall not refinance or make a new loan
io any such borrower except in accordance with the provisions of this
chapter.

If two or more licensees are under the same ownership, or
under common control, then such of their offices as are located in the
same political subdivision of the State, or within five miles of each
other, shall be treated as one licensee for the purpose of this section.

§ 6.1-287. Combining to obtain higher rate than permitted a single
borrower.—No licensee shall combine or conspire with another licensee
to cause the same person, or a husband and wife, to borrow less than *
one thousand dollars from each of them for the purpose of requiring the
payment of a higher rate of charge than would be permitted if one
of said licensees had loaned all, or as much as * one thousand dollars
of, the amounts borrowed from both licensees.

§ 6.1-288. Wage purchases.—_The payment of * one thousand dollars
or less in money, credit, goods or things in action, as consideration for any
sale or assignment of, or order for, the payment of wages, salary, commis-
sion, or other compensation for services, whether earned or to be earned,
shall for the purposes of this chapter be deemed a loan of money secured by
the sale, assignment or order, and the amount by which the compensation
so sold, assigned or ordered paid exceeds the amount of consideration
actually paid shall for the purpose of this chapter be deemed interest or
charges upon the loan from the date of the payment to the date the compen-
sation is payable, which amount shall not, in any case, be more than is
sufficient to yield, to the licensee making the loan, interest on his invest-
ment at the rate of ten per centum per annum. Such transaction shall in
all other respects be governed by and subject to the provisions of this
chapter.

§ 6.1-291. Collection of loan made outside State.—No loan made out-
side this State in the amount of * one thousand dollars or less for
which the greater rates of interest, consideration or charges, than is per-
mitted by the law applicable to such loan in the state in which the loan
was made, has been charged, contracted for, or received shall be collected
in this State and every person in anywise participating in an effort to en-
force the collection of such loan in this State shall be subject to the
provisions of this chapter.

§ 6.1-294. Investigations generally.—For the purpose of discovering
violations of this chapter or securing information lawfully required
under it, the Commission or its duly authorized representative may at
any time investigate the loans, books and records of any person who is
engaged, or appears to the Commission to be engaged, in the business of
making small loans as defined and described in, and required to be li-
censed and supervised under, this chapter, particularly in § 6.1-249, or who
advertises for, solicits, or holds himself out as willing to make, loans in
amounts of * one thousand dollars or less, or who the Commission has
reason to believe is violating any provision of this chapter, whether such
person shall act or claim to act under or without the authority of this
chapter, or as principal, agent, broker or otherwise. In furtherance of
the investigation the Commission through its duly authorized representa-
tives shall have and be given free access to the offices, places of business,
books, papers, accounts, records, files, safes, and vaults of all such persons,
and shall have authority to require attendance of witnesses and to examine
under oath any person whose testimony may be required relative to any
such loans or business or to the subject matter of the investigation,
examination or hearing.

§ 6.1-301. Annual reports.—Each licensee shall annually, on or before
the first day of * April, file a report with the Commission giving such
relevant information as may reasonably be required concerning his busi-
ness and operations during the preceding calendar year as to each li-
censed place of business conducted by him within the State. Reports shall
be made under oath and shall be in the form prescribed by the Commis-
sion which shall make and publish annually an analysis and recapitula-
tion of the reports.