15 October, 2008

NJG, Incorporated and Nicholas J. Gianakos, the heads of Instant Cash Title Loans, a Charlottesville based automobile company were sued by the Attorney General Bob McDonnell for violating the rules set by Consumer Finance Act.

Instant cash loans come under any exceptions offered by the Consumer Finance Act and charged its consumers a higher rate of interest that was much more than the legislative limits.

Attorney General, Alan Zimmerman is a customer reporter at Charlottesville publication. He first pointed out the violations and reported the company’s misconduct to the senior authorities. This act led to the declaration of some legal action against Instant cash loans, after a detailed examination by the Office of the Attorney General took place.

McDonnell revealed that they get cheated and get legal defense in market so that customer lending laws must be strictly obligate. He further added that he is happy that his office acquired essential legal actions against such unlawful conduct rapidly.

According to Consumer Finance Act in Virginia, no unlicensed lender can accuse or receive interest above 12% p.a. on consumer loans, unless exception from the law. One of the exceptions included in the Act permits lenders to accuse funding charges and other fees at an already agreed-upon rate by offering them open-end credit. But this exception is restricted to the fact that before charging any fees, the lenders must offer the borrowers a minimum of 25-days grace period in order to repay their loan in full.

During the specified period, instant cash loans confirmed its title loans as closed-end credit but did not make any provisions for the needed funds accuse grace period. It failed to meet with the conditions for open-end credit and charged more that 12% interest, which resulted in violation of the act.